'No competition to Indian software services'

even when it companies are cutting down their spending and workforce, gartner says the 'gloom and doom' situation is not as bad as it has been predicted by the media. craig k baty, group vice-president, gartner research japan and asia/pacific, says india has shown no signs of being hit by the slowdown and is estimated to export it services worth $40 billion by 2005.baty spoke to times news network's anurag prasad in detail about the market trends during this period. excerpts: is the us economy going through a phase of recession? people had invested lot of money in the dotcoms. people who were managing these companies were the real spenders. they were increasing acquisition of capital goods, cars and other luxurious items. these people suddenly disappeared from the market. the investors obviously burnt their fingers. they lost confidence and stopped spending. now they are getting their act together. but the media has spoken about it too much about it and too often. gartner predicted the failure of dotcom companies some two-and-half years ago. we said 95 per cent of these companies would fail and every one called us nuts. we saw the whole episode as short-term blitz and did not invest much in dotcom or their forecasts and research. what is the current market trend in asia? we cannot take asia as a unit and spell out a trend. however, we have country by country analysis done and have trends for those counties. korea has not recovered from the 18-month old imf crisis, which we call the asian crisis. their major import partner was the us and as the american economy slowed korean economy got hurt. same applies for taiwan too. singapore, which is a financial and manufacturing hub, is doing reasonably well. it is doing well in software services area, but hardware sector has taken a hit and small-medium enterprises have been affected. but on a whole it has managed to keep its head above water. hong kong is doing well in it sales but is being taken over by the main land china where shanghai is being developed on hong kong lines. china is not likely to be affected by slowdown in one economy. japan is not doing well. australia with low interest rates and high employment rate is emerging a low-cost producer of export goods. the dollar is undervalued and sectors like finance and manufacturing is doing well. india till date has not given indication of the slowdown hitting it. what has been affected here is the mentality of people that a slowdown is happening. the indian companies are, in fact, doing very well. they have just to get their strategy right and project themselves as an opportunity to save money by making us companies outsource their software services from india. a trend is already there. companies are setting their business process here and even companies cutting staff in us have been reported to have invested in india. but there have reports of indian companies cutting staff and their bottomline being affected by the us slowdown... these are minor glitches. a drop of 5 per cent here and there does not mean disaster. software services companies are doing well. the drop might mean a slowdown but they have to focus on developing market and not depend just on the us. europe has not been hit by the slowdown. japan can offer a good opportunity. it has almost 5 per cent of the it services market and can be good revenue generator. gartner has seen, twice before and this is the third time, that during any economic down turn companies look to outsource their services and india can capitalise on this. what kind of strategy change is recommended for indian companies? may be strategy is not the right term to be used. companies should get rid of the failure mentality. taking a negative mentality can damage entrepreneurship and risk taking nature -- trademarks for indian business. keep banging on the door and keep working before the us comes out of its bunker mentality. companies should forget about the downturn and carry on with their work. how do you compare the india and china? india and china are two different markets. india bases most of its it products on intellectual property -- software and services export, skills, logic and like. china is a manufacturing economy. manufacturing high-quality commodities -- like pcs, workstations and servers -- form the base of their market. their economy is based on exporting hardware at a lower cost in high volumes. this is responsible for booming their it economy. so, anyone looking for cheap hardware with better quality than korea and taiwan they will look at china. thus, china is good option for pcs and computer whereas for software and services, it's india. one cannot compare the markets, but both economies are growing. from where india is likely to face competition? indian software development and services industry does not face competition from any other country. the philippines is a distant second in software development. israel might have good software developers and has developed packaged software, but not strong enough to pose threat for india. what should india focus on? the indian market is basically application development integrated with software services. it has a good service market over the software market. further, companies developing software application have the capabilities to set data centres and call centres. over the period of time, they have adapted to their infrastructural problems. gartner is conducting study that will identify 12 it enabled services which indian companies can provide. the data centres-call centres applications developed in india are really good. business processes outsourcing, human resource and financial management are areas that can be focussed on. the next step is not to establish india as a hardcore software development centre but as a hub for processing and infrastructure services. how is the indian domestic market? at present, the domestic market is 15-20 per cent of the services market. it estimated to grow at 30 per cent. this will happen because more infrastructure and software development business india gets, more it enabled services will be required. bringing work to india generates domestic work as well. which markets should indian companies should look to? the us market is down, but coming back. but indian companies should not pull out their men from there. they should be patient, and keep the business running. once you get out from there, it will be difficult to re-enter the market. the companies struggling and still managing to keep their business will come out winners in the long run. western companies pulled out of asia during the crisis and were termed as friends of good times only. this should not happen with indian companies. markets like japan need to be taken seriously and need help to establish proper infrastructure. with its cultural proximity, india and japan can really do well. is the absence of branded software names affecting the indian software industry? indian companies have developed in-house software applications that can be sold to outside companies. the software can be packaged branded and exported. most it companies are becoming a brand in itself and there is no reason why they cannot grow bigger. but the best way to create brand is to make a good quality product and sell it.