Financial Daily from THE HINDU group of publications
Saturday, Sep 25, 2004
IT sector contribution could touch 9 pc of GDP: Karnik
Hyderabad , Sept. 24
THE IT sector contribution to the country's gross domestic product (GDP), now at about three per cent, could grow to about nine per cent by 2008-09, given the potential of the sector and the inherent advantages the country's manpower holds despite the growing competition from other countries, according to Mr Kiran Karnik, President of Nasscom.
Speaking at an IT Conclave organised by the Indian School of Business, Mr Karnik dismissed the competition from some of the countries including China, and said that the country's technology sector performance was heartening given the growth rate of about 35 per cent this year.
"From about $12.5 billion in exports, we are on course to achieving the $50-billion mark in exports projected by the sector and this would well be complemented by the growth of the domestic IT sector."
From about $3 billion in domestic business, this could well grow to about $30 billion by the year 2008-09, he added.
"However, this is not with some inherent problems that include infrastructure bottlenecks and manpower development constraints."
With regard to poaching and growing attrition levels in the IT sector, particularly the ITES segment, Mr Karnik said that this was a matter of concern for the sector and for Nasscom.
"But there is nothing one can do about it. There have been instances of arrangements within large companies against this making notice mandatory for the employee to leave. But one cannot ensure that such a mechanism works across the industry."
According to him, the only way to address this is increasing the manpower talent pool.
"This cannot be achieved overnight, but over the next few years, we will be able to generate additional manpower pool. The overall manpower strength in the sector is estimated at about 800,000 and we expect to add about 100,000 by this fiscal-end."
He said that often, the issue relating to competition from neighbouring countries like China is exaggerated. "On the contrary, the Indian software sector manpower is quite deep and it will not be easy for any country to displace our inherent advantages. But we cannot be complacent about this; we need to further consolidate on this advantage."
The CTO of TCS, Mr Keshav V. Nori, said that the Indian IT sector experts need to scale up the value chain and this could well be addressed by taking to areas such as IT consulting. This does not need much investment but strategic shift in the way businesses function.
The COO of Mahindra British Telecom, Mr H.N.L.N. Simha, said that while it was difficult to predict the way technology sector would shape up over the next three years, let alone in the long term.
"But the advantages Indian techies have built up could be consolidated upon to expand the scope of services and take to building products."
Prof Rajiv Banker of ISB said that there was dearth of managerial talent in the IT sector and it would be a while before a large pool is built.
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