There was a time when the world used to speak about Japan Inc. But now India Inc is increasingly emerging, largely on the back of its high programming skills, which are widely used by western user companies and software vendors.. The message is so clear that it prompted US president Bill Clinton to comment to the Indian Prime Minister IK Gujral : "After all, you Indians own half of Silicon Valley."
According to a recent survey conducted by the World Bank, India was ranked number one choice for US companies outsourcing developments. Now the country?s companies have their biggest chance ever to expand their software business - the dual threats of the millennium bug and the Euro currency conversion, each of which present revenue opportunities of about $1 billion over the next two years.
But India?s own skills shortage, a slow start, poor infrastructure and lack of coordination have, in the opinion of some, wasted the Y2K opportunity. Many are now looking to the Euro, rather than the millennium bug, as the crisis that India really can help to solve.
Euro and Y2K work has so far remained in the hands of only a few companies. Fewer than expected have taken up Y2K work, partly because of previous commitments and domestic issues, and with the larger developers occupied with the millennium work, the Euro conversions remain even more neglected. Many Indian analysts believe this is an opportunity missed - and now many more software houses are waking up to the potential of these twin problems.
With major programming companies fully occupied with the millennium bug, so far there has been lukewarm response to the Euro issue. Only a few companies are actually working on projects - a trend that is not limited to India. Worldwide, companies are still unprepared for the currency change on 1 January 1999.
With the adoption of the Euro, all software for currency transactions will have to be rewritten, even in non-participating countries in Europe and other countries that trade with the EC. "Indian companies are in a unique position to offer cost effective solutions for the Euro conversion," says Dewang Mehta, executive director of the National Association of Software and Service Companies (NASSCOM). "The implications of the Euro on wholesale banking, trade and industry are diverse and far-reaching," he added.
. The issues go beyond simply adding another currency to the existing multicurrency system."A range of systems from legacy systems will be affected across industries," Mehta said. A whole range of systems from COBOL and PL/I applications to client/server and database solutions will be affected across a wide spectrum of industries - finance, insurance, banking, airline, tourism, foreign exchange and so on.
The Gartner Group has predicted a potential business of # 200 billion, since 85 per cent of all commercial systems need to be changed to accommodate the Euro. Today, 32 per cent of the world's business is transacted in dollars. But all the European currencies, when put together account for 38 per cent of the world trade. While the Euro is essentially a business problem, unlike Y2K which was an IT problem, compliance still offers an opportunity to IT companies.
"The Indian software industry has not exploited the potential that the European market offers. The Emu provides a unique and significant opportunity to broaden the Indian base in Europe and build foundations for the partnership that will catapult Indian into the new millennium," says an industry analyst.
According to Arvind Thakur, director and senior vice president of Indian IT major NIIT, domestic software firms should keep a tab on the developments in Europe to derive the maximum mileage out of the situation. "Uncertainties still persist in Europe over the Euro. Not all the countries in the continent are going to adopt it. We will have to chalk out special strategies to deal with the problem." he added. The conversion would impact the financial sector, especially the banking sector, the most. "A plethora of applications will come up in the banking sector, mainly because all settlement systems will have to undergo changes." he says. Foreign exchange rates have to be revised during the transition period to facilitate the coexistence of the Euro and national currencies.
"The Euro conversion project is likely to be the next moneyspinner for India after Y2K,? .Asutosh Gupta, CEO of IMR India, one of the Indian companies to start work on the Euro, said. Very few Indian companies had automation tools needed for such projects. "Manpower availability will determine who will do much of the business." he added. His reading is that most of the US companies will jump into the fray and subcontract the programming and testing areas to developing countries like India.
Another company that is developing tools for Euro programming is Peritus India. According to its centre head M Radhakrishnan, Euro compliance will require an enhancement of the software. Peritus is developing these tools to supply to software companies worldwide, offering impact analysis tools in the first phase and limited conversion support in the next, according to company sources. Since modifications will also be felt by the end-user, retraining will form large part of the project, says Radhakrishnan. The implementation part will probably be subcontracted to European companies, though the Indian IT community, being English-speaking, can also try for it, he added.
Indian companies enjoy a headstart over their nearest rivals. High standards of mathematics, engineering and logic adopted give Indian programmers an edge over rival countries in offering error-free, quick and efficient solutions, Mehta said. The world's second largest pool of English speaking work force is another added advantage. But, India can expect competition from countries like Ireland, Hungary and The Philippines.
And many are still preoccupied by the flood of Y2K work, even though the Euro is potentially a longer term business.
With the Y2K deadline barely 800 days away, Y2K is starting to have a huge impact on the Indian software industry . According to IDC, total US spending on Y2K between 1995 and 1999 has been estimated $115 billion, with $46 billion of this spent on projects outsourced abroad.
This is where the opportunity lies - India has a very small Y2K problem domestically, since it barely computerised until the late 1980s. But the software industry, which grossed revenue of $ 1.8 billion and exports worth $ 1.15 billion during 1996-97, hopes to ride the surge in Y2K business to become a global leader in software technology by 2015. According to industry estimates, India has already bagged more than $ 800 million worth of Y2K projects orders. NASSCOM recently announced that Indian firms would tap business worth over $ 2.5 billion from the global Y2K conversion opportunities.
Is India really in a position to deliver? To maximize the opportunity, India's preparation has to take place at the macro level, with government departments and VSNL, the monopoly Internet access provider, playing a role in making the multi-billion dollar dream come true. Not to speak about power scarcity in India. If clearance, satellite links, and telephone lines become bottlenecks, no company worth its salt can deliver a Y2K conversion successfully.
Although contract enquiries are pouring in, the manpower and the infrastructure are not available. This has not only resulted in international clients looking elsewhere for getting their jobs done, but there seems to be some sort of backlash against Indians too.India is losing $14 million of business to rivals each day due to a huge shortage of qualified manpower to handle the huge volumes of Y2K projects, according to RH Naqwi, of the government-backed Electronic and Software Export Promotion Council (ESC). India needs over 125,000 high quality professionals trained in Y2K conversion but the country has only about 30,000 qualified people.
In addition, there are only eight mainframes in the country that can be used for executing the projects, all of which are owned by top companies. Of these, Tata Consultancy Services has three, and others such as HCL Consulting, Infosys Technologies, Wipro and Pentafour, have one each. Not surprisingly, therefore, even an optimist agrees that the number of personnel with IBM mainframe experience does not exceed 5,000. There is no time to train significant extra numbers.
Industry associations, which have been in the forefront of generating, claiming that "our" companies can handle every possible job, have now started downscaling the target. From billions, it is down to a few hundred millions. But that is just the monetary loss. Even greater is the slur on the country's reputation. Analysts feel that a coordinated effort by Indian software industry would have helped. Some others differ, saying it would have played a marginal role because the problem is too big and time is limited. Similarly, the concept of virtual software organisations when foreign companies could open their Y2K units within Indian companies is yet to really take off.
Is there hope still ? From the look of it, barring a few big companies, not much seems possible on the Y2K scenario. But there is life after Y2K. Other opportunities exist in the future. A lot of software will need to be rewritten soon for the unified European currency. Even the resurgence in the demand for mainframe computers will open further opportunities. Industry pundits actually estimate that the commercial opportunity in these may be more than the Y2K. It is very high time somebody advised the Indian bureaucrats that the government and the industry should act together in making sure that India can face that day with confidence.
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