New Delhi, 13 March 2001 

Nasscom and ITAA sign IT pact

Nasscom continues to be upbeat on software exports

  In order to continue to increase the trade and co-operation in IT software and services sector, between India and USA, Nasscom (National Association of Software and Service Companies) and ITAA (Information Technology Association of America) today signed a Memorandum of Understanding (MoU).

  The Nasscom-ITAA pact was signed by Mr. Dewang Mehta, President, Nasscom and Mr. Harris N Miller, President, Information Technology Association of America (ITAA).

  Mr Dewang Mehta, President, Nasscom said, “Nasscom and ITAA have been working very closely together for the last five years and have now decided to formalise this agreement”. He further added that, “against the backdrop of slowdown of US economy, the Nasscom-ITAA pact assumes greater significance, as it would try to bring new opportunities of business to IT industries of both countries.”

  On his first visit to India, Mr. Harris N Miller, President, ITAA said, “I am very excited to be here as the Indian IT industry is today emerging as one of the leading IT nations of the world. ITAA is honoured to work with Nasscom to contribute to the mutual growth and development of our respective Information and Communication technology companies”. Mr Miller added, “the emphasis of this MoU will be on software, IT services, internet, e-commerce, m-commerce, ASP, communication software, e-security, e-government and IT enabled se rvices.”

  Highlighting IT trade between India and USA, Mr Dewang Mehta said, “USA continues to be India’s largest software export market and it will continue to have its dominant position. In 1999-2000, out of total Indian software exports of US$4 billion, almost US$ 2.35 billion was exported to USA. In 2000-01, out of projected software exports of US$ 6.24 billion, almost US$ 3.7 billion of software is expected to be exported to USA”.

 Mr Mehta emphasised that, “with the signing of the MoU with ITAA, we would now work very closely in creating marketing alliances between US and Indian IT companies with a special focus on SME member companies”.

 Mr. Harris N Miller added, “the objective of signing the MoU is not only to further the trade and business relations between India and US in this sector. It will also promote joint marketing of IT software and services to other countries like Europe, Japan and other parts of Asia, Africa and Latin America.”

  Over the years, ITAA has done extensive work in promoting e-security and also lobbying for increase in global cap of H-1B visas. While complimenting Mr Miller for his leadership, Mr Mehta said, “we would like to thank ITAA for being an ally in providing factual flow of information to the Capitol Hill to increase annual H-1B cap from erstwhile 115,000 to the current cap of 195,000”.

  Nasscom now plans to work closely with ITAA in promoting many IT sub-sectors including e-security solutions as a niche market and creating platforms for mutually beneficial tie-ups between Nasscom and ITAA member companies to provide e-security solutions to India, USA and rest of the world.

  Some of the features of the NASSCOM-ITAA Memorandum of Understanding for IT software and services sector between India and US are as follows:

  •       NASSCOM and ITAA to act as the primary channel of co-operation between the information and communication technology companies of India and USA.

  •       Organise the exchange of information and facilitate contacts and co-operation between member companies of the two associations.

  •      The main areas of co-operation will include all sub-sectors of IT industry including IT software and services, internet, e-commerce, information security, telecommunications, including mobile commerce, human resource training, knowledge management, and research and development.

  •       Promote the exchange of IT trade missions and business delegations between the two countries.

  •       Act as facilitators for building alliances between each association’s member companies.

  •       Co-operate in public policy efforts to promote global growth of the IT industry, and with their respective governments, wherever appropriate.

  •       Promote each other’s respective surveys, seminars and exhibitions.

  •       Support the exchange of relevant and mutually desirable information. Exchange their own periodicals, non-periodicals, publications and research survey reports, whenever possible and under the condition they are allowed to do so (Copyright law).

  •       Facilitating flow of investment between two countries.

  
US Slowdown and its impact

  Speaking on the impact of the slowdown of US economy on Indian software exports, Mr Dewang Mehta said, “we believe that one of the magic mantra of cutting into expenditure and cost effectiveness is outsourcing. The Indian software exports thrive on outsourcing, therefore a logical conclusion is that slowdown in US economy will increase outsourcing and in turn increase orders for Indian software exporting companies”.

  “In the current fiscal year (2000-01), India’s target of software exports is US$ 6.24 billion and we believe that we will be right on our target or even marginally exceed it.” said Mr Mehta. It must be recalled that in fiscal year 1999-2000, the software exports from India was only US$ 4 billion, so the jump expected this year is 55%. “USA almost forms 60 percent of exports and we are confident that we will continue to grow our software exports to USA during 2001-02 by 50-55%.

  “India has been smart to taken on IT Enabled Services as another growth opportunity. Experts believe that outsourcing of IT Enabled Services again reduces expenditure in companies and therefore a major slowdown would only increase the outsourcing of IT Enabled Services. The main area of growth in IT Enabled Services is Call Centers,” added a confident Mr Mehta.

  Mr Dewang Mehta said, “in the last year 185 of Fortune 500 companies outsourced their software requirements to India. Nasscom has started the process of talking to these companies to understand their future outsourcing requirements. As of date, out of 86 companies contacted, 73 have indicated continued increase in outsourcing, whereas 9 companies have indicated decrease and 4 have not been able to commit their decision”.

  Mr Mehta added, “On the contrary, we would like to convert this situation into an opportunity. For example, we plan to do road shows in USA during April and June 2001 to also attract the remaining 315 of the Fortune 500 companies to outsource their requirements to India. We will tell them how they can cope with slowdown by oursourcing to India.”

  “In the last two months, we have seen that some companies have been hit by the US Economy slowdown, but majority of the companies continue to grow at 50 percent and new software companies continue to join the bandwagon. This means that the overall industry growth rates in software exports will not decline,” added Mr Mehta.

  “In the last few weeks, companies like DuPont and Deutsche Bank have announced increase in outsourcing services to India. Also, companies in Europe and Japan are increasing their outsourcing to India by more than 60 percent from the erstwhile 40 – 50 percent. This is good news,” said Mr Mehta.