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The president of the National Association of Software and Services Companies (Nasscom), R Chandrashekhar, who took over the reins early this year from Som Mittal, has an ambitious goal.
By: Anand J
He plans to grow the Indian IT industry into a $300-billion behemoth by 2020, and intends to bridge the communication gap between various segments of IT such as services, products and hardware. Prior to taking up this position, Chandrashekhar was secretary, telecom & IT, government of India. In an interaction with Anand J, he talks about the importance of helping smaller IT firms grow, without being overshadowed by the big sharks of the sector.
All along you have been a bureaucrat, helping governments fashion new policies. Now you are on the other side of the fence, trying to be an influencer. How different is the experience?
It is not really different because, ultimately, it is the same space, same sector and the same kind of issues. Even in policy-making you do consult people across the industry. But what makes it interesting is that, being in the government earlier, I have a sense of the various factors that the government takes into account.
In the government you look at implications across other sectors—revenue implications, issues of accountability and transparency and so on. When policy suggestions come and if the industry speaks in multiple voices, then it becomes difficult for the government to decide. Personally, I find the understanding of how the government works as helpful.
Today, there is an artificial barrier between software services and hardware and products. These barriers have to be broken down. For instance, there is a lot of software going into electronics and healthcare. We are working closely with the electronics association as to how do we harmonise the different set of recommendations both the bodies might place in front of the government. This means a lot more work, lot more interactions, lot more collaborative activity, but will be a holistic approach.
How do you see the current fiscal faring for Indian IT companies?
In our strategic review for 2013-14, we stated that revenue growth in the sector would be between 12% and 14%; eventually, the industry closed at a shade over 13%. We said that it will improve this year, not hugely, but anywhere between 13% and 15%, which is a 1% rise over previous year. The area we are concerned about is the domestic market, which was flat in dollar terms. It grew by 10% in rupee terms, but then the rupee had depreciated last year.
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This underlines the importance of what the new government is saying about the use of technology in governance and delivery of services, and the sentiment after the government has taken charge is quite positive. Private sector investments had slowed down in technology. We hope this government will bring stability and growth-oriented policies.
Have you been able to ensure that the smaller IT companies have an equal say?
That is a logistical challenge. The dilemma the industry faces today is that 80% of its turnover comes from 1% of the companies. If you think about it from a democratic point of view, it is a challenge. That is why Nasscom set up various councils. Even within these, there are a few companies whose needs have not been addressed. For instance, the overseas companies which have huge operations in India, their challenges are different. There are regulatory and cultural issues.
The Indian Software Product Industry Round Table (iSpirt), the product organisation which was a breakaway faction from Nasscom, was formed because of this. Are you in a better position to take industry along now?
The industry will be better placed to comment on that. But the fact is I don’t have any baggage and I don’t come from any particular segment. Both by training and practice, I have always been looking at a holistic approach by balancing out various voices. The needs are very different for large and small companies. It is the focus on issues of some of these larger companies that might have brought about this perception of us not being keen on small companies. It might also have been that the issues of large companies tend to get lot of focus in the media. This is a perception problem.
Communication is very important and we need to let companies know what we are doing and draw them into the conversation. That is our whole initiative with the 10,000 Startups Programme.
Nasscom has been saying that the industry will generate $100 billion from the start-up and entrepreneurial ecosystem by 2020…
If you look at our revenues minus the hardware, we are talking about $98 billion, of which 80% is from 150 big companies. I think that is realistic. In 2008, when McKinsey did a study, they said 75% of the growth will come from areas that are not even visible today. From the beginning it has always been the case and so has been our projection. We know that this kind of growth will come but we don’t know from where. We can’t get away from the tyranny of numbers.
Some product companies that have been around for a while belie these projections, isn’t it?
I agree that the pure product growth has been small. The mistake here is in the conceptual framework. You take e-commerce as an example. Some are growing 100% in a quarter. Of course, they are in an early stage of growth. We are moving into an era where we have cloud-based solutions and a subscription model. Indian consumers love cheap pay-as-you-use models than buying a full software. The shift in technology and business models is so dramatic that we are going to witness what I call a telecom effect rather than the historical IT industry effect. There was no technology innovation in the telecom industry but more of innovation in the business model. In IT, we are talking of both.
How do you go about predicting these numbers? Projections are always risky, right?
It is a hazardous business. At Nasscom, we tend to be a little conservative and have been right more often than wrong. So, how do you deal with the unknown? There are trends which show us the kind of possibilities but there are many imponderables also on the way. For instance, if the regulatory environment does not allow me to get a payment, it affects growth. You put a number on the table and work towards it. It is based on certain assumptions, certain estimates, but it is not an exact science.
Are we going to see the Immigration Bill worries subside next year?
Whether the issue is on the front or on the back burner, we have focused on trying to convey to the lawmakers and administration in the US what our views are—how the Indian IT industry actually helps the US economy in terms of creating more jobs, helping US companies become more competitive globally and giving them access to various skills that Indian IT companies can provide. This is a global industry and workforce, and they need to understand that people have to come for a short period and move on. We had an issue recently in Canada which had placed more onerous conditions for visas. They wanted certification from clients and also a certification that there is non-availability of similar persons from both companies involved. These have made the process cumbersome, tedious, uncertain and expensive. In an industry that moves very fast, these are not conducive.
Courtesy: Financial Express
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