The Telecom Regulatory Authority of India (TRAI) had on Tuesday mandated massive cuts in the leased line charges, in addition to port charges payable to the Videsh Sanchar Nigam Ltd and reducing STD and ISD rates by half within three years. This, the software sector feels, will give a tremendous boost to their bottomline and allow the star-performing sector to touch newer heights in the world market, besides leading to more integration within multiple locations within India.

The software exports from the country are slated to cross Rs 11,000 crore at end of this fiscal year. According to a estimate by the Electronics and Computer Software Export Promotion Council (ESC), telecom payout forms as much as 25 per cent of total software exports which works out to Rs 3,000 crore annually.

"This cost will now come down substantially and permit many moresoftware companies to undertake more work from abroad unlike earlier," felt ESC executive director RH Naqvi.

Echoing the same sentiment, National Association of Software and Services Companies (Nasscom) general manager SV Ramachandran said lowering of half-circuit charges will mean companies will be able to work with higher efficiency and attain better productivity.

"They can go in for more circuits and higher bandwidth for faster processing. Earlier, many small and medium companies had to miss out on global opportunities as they could not afford multiple links in different locations due to high costs. Now, more offshore delivery will be possible and they will be able to access customers globally," he added. IT-enabled services such as medical transcriptions will become more attractive for small and medium companies to enter. High telecom costs form a substantial chunk of their expenditure. On the other hand, large companies like TCS and NIIT are unlikely to be affected due to different reasons, whileInfosys, Wipro and Pentafour will see a good impact as they have high revenues from software exports.

Naqvi, however, felt that companies which undertake large mainframe jobs and very large offshore jobs too will benefit tremendously. Over 700 companies registered use telecom links, according to ESC.

Till now, a company had to take separate circuits for different locations, but easing of that rule too has been hailed. Allowance of inter-connectivity across multiple locations within India at cheaper rates will have a very favourable impact on software development in India, felt National Informatics Centre director-general N Seshagiri.

"Those doing work on a long-distance basis in more than one location will benefit as they can work in different branches, rather than in one integrated STP-like centre. With proliferation of high-speed communication systems, they can connect many locations easily through video-conferencing and do remote collaborative work in an integrated environment," he explained. This,he felt, will strengthen the trend of having distributed software development centres.

Eastern Software Systems CMD Anil Bakht too reacted favourably to the cut in leased circuits and reduction in port charges and felt that "this will encourage smaller IT firms to leverage the reduction to translate into better opportunities".