The Indian IT industry, which had taken a quantum leap, post liberalisation two decades ago, has matured over the years. Besides technology and domain expertise, cost has been a major factor in making India a software services powerhouse. However, the concern is how long India will be able to sustain its competitive advantage, as China and other markets are already making large strides to challenge its dominance in the sector. Som Mittal, president, Nasscom, discusses all these in an exclusive interview with FE?s Ayushman Baruah. Excerpts:

Given that India is facing stiff competition from China and other Asian countries like the Philippines and Vietnam, how long will the India advantage hold? What will be the competitive advantage India will need to have to sustain its growth?

India has an advantage in terms of maturity, scale, robust process and customer confidence. But we cannot afford to be complacent. India must focus on offering more value-added services, build deep customer relationships and leverage innovation. We have to remain cost competitive, as already several companies are having outcome-based pricing. In several cases, these new emerging countries also serve as sites for business continuity programmes. India needs to keep assuring customers that it is a trusted destination. When work gets disrupted due to ?bandh? calls, etc, it raises concerns.

Is Nasscom seeing any new green shoots which will keep India ahead? What is the potential of tapping the domestic market?

Lately, discussions with our customers have been beyond outsourcing and offshoring. We have now shifted our focus more on transforming their business models and get countrywide increased efficiencies. There are new verticals like utilities and healthcare, and markets like the Middle East and Latin America which are under penetrated. With regards to the domestic market, there are three broad

segments??corporations, individuals/small businesses and the government. The corporate spending in IT is increasing as companies become more global. The scope to penetrate the other two segments is much higher as we are behind. We estimate government spending, which is expected to reach $5 billion by 2011, to be a big driver .

With the changing dynamics in the macroeconomic environment, do you see the number of applications for H-1B visas rising in the fiscal year FY 10-11?

This is a fairly complex issue. In the US or anywhere, jobs can be classified into two categories: temporary work, which include short-term assignments and permanent jobs like account managers, system architects, etc. A lot of Indians work in the US on a temporary basis mainly on application development and testing, and because of talent availability issues, these positions were the maximum users of H-1 B visas. On one hand, the ability of Indian companies to hire locals is increasing, so the need for H1-B visas may be lower; but on the other hand, if the US economy turns around, there would be a lot of hiring by US companies as well and the demand for visas may rise.

In response to the anti-outsourcing wave in the US last year, Nasscom visited that country to meet members of the Obama administration. What was the outcome of those meetings?

Given the sheer size of the market, the US is evidently where our focus lies, but we continue to visit all our markets to share our perspective. We spend a lot of time with law makers, executives, industry leaders and various think tanks in the US to prove how we can add value to them. With regards to the anti-outsourcing wave in the US last year, Nasscomm believes that India adds to the competitiveness of the US market and global sourcing ?? be it in manufacturing or services ?? has added to the US? ability to grow as an economy.

How do you see the Indian software industry growing in coming years?

Revenues from exports of software and BPO services grew by 5.5% to $50 billion last year. Engineering services crossed the $10 billion mark. For FY 2010-11, exports revenues are expected to grow 13-15% and the domestic revenues by 17-18%. The total revenue from the sector has the potential to touch $ 225 billion (exports and domestic) by 2020.