The report concludes with the areas which present opportunities for synergybetween the two countries in the IT sector. To begin with, the report statesthat the Indian IT software and service industry has grown eight-fold in thelast decade and stood at A$ 5.9 billion in 1998-99. The study adds that:"India is acknowledged the world over as an important base for offshore ITservices with 203 of the Fortune 500 companies among its customers."

However, the report does go on to state that it is the lower operating coststhat have worked to the advantage of Indian firms in terms of securingbusiness contracts but the advantage of low cost manpower is getting slowlyeroded due to "decreasing compensation and incentive differentials and wagearbitrage."

The study on software concludes that "the Indian software sector iscurrently focussing on developing software that involves IntellectualProperty Rights and this initiative is being pursued in order to derivemultiplier income. Almost all income now is based on labour hours spentmultiplied by wages and rising input costs, mostly employee costs, arebeginning to have an adverse effect on profit margins".

Salaries in this sector have been rising by 30 per cent annually. In termsof opportunities for the Indian IT sector post the Y2K boom, the reportcites Euro Currency solutions, embedded software, off shore softwaredevelopment and systems integration as the thrust areas. In terms of sectorswhich will exhibit the maximum demand for IT products in India, the reportis bullish on financial services including bank computerization andnetworking, credit cards, transaction automation, ATM, electronic fundtransfer, foreign exchange and treasury management, stock exchangecomputerization, insurance and leasing.

Multimedia has also been identified as an emerging opportunity. Themultimedia sector (encompassing telecom, broadcast and IT industries) isestimated to have reached A$700 million in 1999. The pool of venture capitalinvestments in India by overseas funds, private individuals, angel investorsand financial intermediaries at the moment is estimated at about Rs 50billion.

The global market for IT-enabled services is expected to grow from thepresent A$15 billion to A$300 billion by 2010. IT-enabled services areexpected to create more than one million additional jobs in India by 2008with revenues expected to increase almost 90-fold. On the Internet front,the study expects India's Internet population to spend close to 1.4 per centof the total regular household spending through the Internet by 2003. Amajority of the revenues (80 per cent) for Internet ventures are expectedfrom transactions by 2003 and only marginally from advertising.

The report concludes with the areas for IT synergies between Australia andIndia and identifies about three. The first is outsourcing by Australiancompanies, the second, joint ventures between "innovative Australianvalue-add type of companies and competitive Indian input type companies".