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Q3 software exports jump 65% to Rs 71.6 billion

Kanchana Suggu in Bombay

The National Association of Software and Service Companies dismissed fears of a decline in demand in the wake of the US slowdown, saying that exports grew 65 per cent to Rs 71.6 billion on the year in the third quarter to December.

"We have been speaking to our member companies, analysts and clients. Based on our talks we do not expect a slowdown whatsoever and are confident of meeting our export target of $6.24 billion during 2000-01 and $9.5 billion in 2001-02," Nasscom president Dewang Mehta said at a press conference in Bombay on Tuesday.

Mehta said that while only 14 per cent of the companies used offshore vendors in 2000, 46 per cent are now considering to use offshore vendors.

Highlighting the new opportunities and focus areas for the software industry, Mehta said, "Communication software has emerged as a major opportunity for Indian soft exports. During 2000-01, we expect to earn revenues of about $900 million from the export of communication software. This represents an almost 100 per cent jump from the revenues earned by the segment last year."

"The telecommunications industry has emerged as one of the largest and most influential industries globally with an estimated revenue earning of $1.3 trillion in the year 2002."

Mehta said that the future lies in communications software and original technology, which is at present being developed by many Indian companies.

He also said that by March 31, 2001 there will be 71 million Internet users.

The industry has been growing at an annual clip of well over 50 per cent, and the current year's exports would come on top of the previous year's $4.0 billion.

Talk of a slowdown dampened sentiments on software stocks somewhat, but most industry leaders' Q3 results were in line with, or surpassed, expectations.

IT spending to drop: Merrill Lynch survey

In the wake of fears of slowdown in the US economy, Merrill Lynch interviewed chief information officers of a few Fortune 500 companies.

A survey conducted by Merrill Lynch -- through interviews with chief information officers of several Fortune 500 companies -- indicates that the increase in company spending on IT would drop from 78 per cent in 2000 to 56 per cent in 2001.

The survey also shows that the CIOs estimate IT budgets to be at 5 per cent in 2001 as against 11 per cent in the previous year.

Tighter budgets meant offshore contracts could benefit Indian companies, he said.

"As the economy slows, there is more pressure on companies to get more bang for the buck," said Nasscom chairman Feroze Vandrevala at the press conference.

Fifty per cent of the CIOs interviewed by Merrill Lynch said that e-commerce is the number one need today and only 32 per cent would trim their e-businesses following the bursting of the dot-com bubble.

While only 18 per cent used ASPs in 2000, 34 per cent plan to use ASPs in 2001.

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