We asked for Nasscoms comments. Sunil Mehta of Nasscom now says its export numbers were lower, at $7.05 bn (excluding ITES, BPO and hardware), but higher than CIIs. And the top 20 companies accounted for 61% of total IT services and software. Why the wide discrepancy Is there gross misreporting of IT figures Or, as Chip magazine suggests, are software exports sometimes a cover for converting black money to white It says software shops set up in India, and a few contacts (often relatives) in the US who organise software imports to mom-and-pop outfits, easily transform black money into legitimate export income. The cost of greasing a few palms is small enough to make it viable. The editorial says while Indian authorities record the exports, nothing ever got imported.
Infosys Technologies CFO, TV Mohandas Pai, attributes the confusion to the existence of two streams of revenue, onsite and offshore. He says Americans probably do not calculate onsite income earned in the country of origin. Or, there may be a misclassification, because many countries only see shrink-wrapped products as software and exclude the large component of services. Orexports by Indian outfits of multinationals to their overseas counterparts may not be correctly accounted in other countries. He says it should be easy to solve the discrepancy.
Well-known IT consultant Prakash Hebalkar agrees that onsite work done in the US may be missed out as invisibles. Yet, he thinks, the large number of small exporters in Nasscom data adding up to large figures are indeed a dubious factor, despite genuine efforts to ensure accuracy. After all, it is no secret that many who honed their business techniques under the control-raj suddenly switched to software exports in the late 1990s.
One explanation is that the US isnt including onsite work done there
Nasscom says US experts find their views on the accounting satisfactory
Admitting concern at the lower numbers reported by the US department of commerce, he says Nasscom has shared its views and data with top US universities and think-tanks, such as the Brookings Institute. Mehta confirms one key area of difference is that the US Bureau of Economic Analysis does not take into account onsite exports (50% of total exports), and exports by US MNCs with captive centres in India (25% of total exports) are not accounted for. I have been personally assured by US experts that the reconciliation is satisfactory, says Sunil Mehta.
Industry sources still think tiny exporters are a worry, but Nasscom chief, Kiran Karnik, has the last word. He says, If Americans think we are exporting only a fraction of what we say we are, I am delighted!