NASSCOM president Som Mittal has predicted a 11%-14% growth rate for the country's Indian information technology (IT) industry and expressed confidence that foreign companies will continue to outsource projects for better margins. Mittal, who was in Ahmedabad for an awards function, said, Indian companies will continue to grow as they are changing strategies in a dynamic market. Excerpts of an interview with on the sidelines of a function held at Gujarat Technical University.
What makes you project the growth rate when economic conditions are tough in India and abroad?
Companies abroad are feeling the pressure on margins and prefer others to execute their projects. Our companies are also diversifying into mobile solutions, cloud, social media as well as transforming organisational efficiency. They are also expanding to emerging markets like Latin America, the countries of the middle east and ASEAN. They are also moving into emerging verticals like the healthcare and others. Fundamentally, Indian economy and IT industry are strong. Indian companies are now transforming from being just cost competitive to focusing on outcome-based pricing and adding value to the offerings.
A committee set up by the Prime Minister is supposed to give its report by the end of month. What's the status?
The work has started and inputs are being collected. There are issues like transfer pricing and safe harbour areas. These will determine that the profit margin of companies is in a specific band. The margins should not be extremely low or high.
Why are cash rich IT giants from India not taking over smaller innovative companies with good revenue prospects? We see companies like Google doing it.
A lot of acquisition is happening abroad. When you acquire a company, domain expertise is necessary. A lot of smaller Indian companies are also being bought by foreign companies. Reasons for acquisitions can be different. When you acquire a company, you need to have a reason for the buy.
At a time when even bigger players are finding growth difficult, what is your prescription for small and medium scale companies?
They should avoid the 'me too' tendency. They should be in a niche area. They should have great product and solution offerings. We believe that a lot of small and medium scale companies will do better than the larger ones. In fact it is already visible. But they need to have their own strengths. What should be done to overcome the stagnancy that has crept into IT Special Economic Zones (SEZs)? Overall, we have a good policy but a lot of reforms are needed. The government should promote setting up of SEZs in tier-2 and tier-3 cities. The lower limit of the area for SEZs should be removed because IT companies don't need big area.
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Sundeep is a Founder of Youth Talent Auzzar, a passionate blogger, a programmer, a developer, CISE and these days he is pursuing his graduation in Engineering with Computer Science dept.
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