We Do Not Need Any Help From The Govt

Updated: May 28 2004, 05:30am hrs
The Indian software industry is at the inflection point of its development course. The linkage between software and the country has been established. The linkage between outsourcing and the country more so. Besides various issues confronting the industry, the question now is what next Chairman and chief executive officer of MphasiS Jerry Rao believes that the process of establishing India as the 21st century powerhouse, which is Nasscoms vision, is a continous building on of the last 15 years. Mr Rao, who is also the chairman of the Indian software industrys apex association Nasscom feels that the ground work has been done and the next level is setting the correct standards. In conversation with Kavita Nair of The Financial Express, Mr Rao talks about Nasscoms initiative, views and expectations of the industry. Excerpts:

How has the role of Nasscom changed and what are the initiatives being charted out to aid the industry in moving onto the next level
Nasscoms original focus was on creating a domestic eco-system within the country that was supportive of the IT services industry. What we did was that we worked on making sure there was STPI, ensured the telecom connectivity, got the export processing zones in place, etc. The next phase entailed ensuring enough H-visas in the US, which had become important. As I keep saying, today we are a big industry. We are moving from adolescence to adulthood. The obligations, requirements and responsibilities of which are security, continuity, robustness and reliability. We now have to start setting the standards and we have to be seen as a country doing that.

Jerry Rao
Our first initiative is in the area of security where we are sponsoring a special international seminar in Delhi in October jointly with the Information Technology Association of America. The idea is to jointly try and evolve the best practices.

There is then the area of product and IPR and how it ought to be created and protected. This is not restricted just to Indian companies but we would like to see more of the multinational companies having their patents coming out of India like that of IBM, Texas Instruments and Motorola.

We have a strong product forum and that is moving quite well and this is our second initiative. The third initiative is ITeS (IT enabled services). ITeS is a natural extension of IT services and we have a strong ITeS/BPO forum which is very active and is working in interesting areas which is helping to grow the domestic market.

Indias claim to fame has always been in its services and not so much in the product sphere. Nasscom has had the product forum for sometime now. What has the success of that been and are there any initiatives from Nasscom to help these companies grow
Firstly, Nasscoms job is not to grow stuff, it facilitates. Some companies do well while some do not. When you look at some of the great product companies in the world today like HP and IBM, they are in fact going the other way round. They, in fact, want to have more service revenues.

Secondly, it is not that services is bad or good or products are bad or good. I think it has to be a combination. We started with services because that was where the natural advantages of the country were. We had the labour force and the process capabilities. What we did not have was successful development of Indian private companies and the successful development of the Indian market which are both intertwined. There is a symbiotic linkage between the two. Which is why we are talking about the two of them - product forum and domestic market.

On the domestic side we would continue to look for reduction in hardware duties and hardware costs.

We want greater government spending in the area of IT, we would like more vigorous involvement of the public sector like banks and so on and so forth in terms of spending money, in terms of getting their IT act together that will help productivity of the country.

So there are all of these areas where we are engaged with different parties engaged in conversations, and seminars creating an eco-system and an enabling environment. The product forum has been quite useful and it is getting people together to talk. It helps them share what they have in common, the issues and how they can help each other. The third forum, which is the latest, is the domestic market growth.

The product forum depends on the SME (small and medium enterprises) segment. It turns out that many product companies are there in the SME segment. That is where there is maximum creativity. The big companies do not have that much creativity. Hence the creation of intellectual property. When you look at all these factors, they all come together in some sense. You know there is a vigorous domestic market, vigorous product companies, and a vigorous SME sector. We have more than 800 members in Nasscom. Not everybody is an Infosys or a TCS. That creativity needs to be tapped. A lot of Nasscoms services to them are free. Once they get big we will charge them. We achieve all of this through discussions and networking. Then we have to sit back and see which one will take off. Sooner or later there will be one in the platform space, in the telecommunications space. Sometimes we are very close to it, and we do not see it. But they will emerge. At the same time we should also not ignore the creation of intellectual property by the multinationals in India. That is the important point. Texas Instruments and Motorola have done a lot of R&D from here.

It must be remembered that Nasscom is not just an association of Indian companies. It is an association of the software service association in India. So Accenture, Microsoft, Oracle TI, Intel are all members. See, I do want my company to do well but at the same time if the industry does well, people get jobs and the reputation of the industry gets better whether it happens for IBM or it happens for MphasiS. Product companies are beginning to understand each others needs how to file patents, how to make it easier to file patents, how to get simultaneous patents in India and in the US. The issues that get discussed are how to standardize value added reseller agreements, how to find agents to sell their products elsewhere, how to work with larger Indian SI (system integration) companies who can give their products a push.

What does Nasscom expect from the policy makers
Nothing. We do not need any help from policy makers. We do not need any help from the government. All that is needed is an enabling environment to file patents easily. We do not need subsidies. We are not looking for handouts. This industry has not grown like that and will not grow like that.

Outsourcing has been in the news more for its issues rather than its obvious advantages. How does Nasscom plan to tackle this, going forward
When the automobiles came, the horse coachmen lost their jobs. As I have said before, these days the number of secretaries has come down drastically since people check their own mail. This has nothing to do with offshoring to India. Its a technological change. And its tough to explain to an individual who is having a disruption due to the macro changes. My own view is that we have to keep pushing the information and the information is clear Indian companies help global companies improve their competitive position and improve productivity. We cannot do anything more than that.

What is Nasscoms view on the taxation issues which have been cropping up
There is a fundamental issue in the way the financial governance in the country takes place. There is a stating intent of the Finance Minister, a stating intent on the floor of the Parliament, etc as to what is proposed.

Despite that, based on some nitty gritty details within the letter of the law, any income tax officer has the authority to raise questions. So this has nothing to do wth the IT industry, it has to do with all of us as citizens and as business people in this country. Our stance right from the beginning is that stick to the intent or clarify if you are not. Let us be transparent about the intent. The actions should support the intent and not sabotage it. On our part we continue with our dialogues with the finance ministry, but it is still a broader problem.