New Delhi, 13 March 2001
Nasscom and ITAA sign IT pact
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).
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
IT trade between India and USA, Mr Dewang Mehta said, USA continues to be Indias
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
Act as facilitators for building alliances between each associations member
Co-operate in public policy efforts to promote global growth of the IT industry,
and with their respective governments, wherever appropriate.
Promote each others 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
In the current fiscal year (2000-01), Indias 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.