Monday, October 4, 2004
(Press Trust of India)
IT sector must work harder : Murthy
Press Trust Of India / Bangalore October 4, 2004
Infosys chairman warns against complacency.
As the Indian Information Technology (IT) juggernaut
rolls on, Infosys chairman N R Narayana Murthy has
cautioned home-grown companies against complacency,
telling them to take up high-end work, maintain cost
efficiency and protect margins with China and emerging
East- Asian IT players vying for a larger share of the
global IT pie.
With the Indian it industry basking in the glory of
high growth even in a low tech spend last year, Murthy
has given a five-point prescription for India to hit
the $50 billion software exports target and the $80
billion revenue mark by 2008.
“Today, the Indian IT industry has scripted an
outstanding success story and changed our standing in
the comity of nations. At the same time, however, we
cannot let ourselves become complacent”, Murthy said.
India is facing competition from East-Asian countries
such as China and the Philippines added to which “in
this globalised world”, customers have access to the
best services anywhere, he said, emphasising, “In this
context, the IT industry in India must work to stay
competitive”.
“We need to ensure that our IT companies move up the
value chain by taking the benefits of the global
delivery model to high-end activities like equity
research and consulting”, Murthy, whose Nasdaq-listed
company was the third to join India’s billion dollar
IT club last fiscal, said.
“While we continue to scale up and meet growing
demands, we must maintain cost efficiency and protect
margins. Further, we must build brand equity for this
industry globally,” he added.
The chief mentor of Infosys said, a “number of steps
need to be taken (by both state and central
governments) to meet this target and remain globally
competitive”.
India’s software exports grew by 30.5 per cent to
touch $12.5 billion in 2003-04 and aims to match the
same growth to cross $16 billion this year.
India, Murthy said, needs to increase penetration in
terms of PCs and communication lines, noting that high
cost of ownership is a barrier towards proliferation
of devices.
Citing a forecast by Nasscom, the apex body of
software companies, he said the number of Internet
subscribers would increase from 2.46 million now to
7.18 million in 2005, which called for additional
investments in bandwidth.
He said, the availability of a robust communication
infrastructure is essential for Indian companies to
effectively implement the offshore business model.
Murthy said, if the level of education in our colleges
is to be improved, an impetus must be given to
improving the level of R&D. “We need to ensure an
adequate pipeline of English-speaking graduates,” he
said.
The software industry also requires good
infrastructure and facilities in terms of airports,
roads and electricity supply. He said as India moves
towards a knowledge-based economy, protection of
knowledge capital becomes essential.
He was also concerned that the software piracy rates
were around 70 per cent.
"I have always maintained that the role of government
needs to be limited to areas like defence, external
affairs, internal security., etc".
Asked what measures india should take to stay ahead of
china, which he recently said lagged just three years
behind india, murthy said the competition came not
only from china but also from other emerging east
asian it players.
Murthy said one of the advantages for india over china
was its large english-speaking population but he
stressed that achieving proficiency in english was now
gaining priority in china. In beijing alone, there
were over a thousand language-training centres.
Additionally, "we must invest further in our supply of
knowledge professionals, our basic infrastructure and
our levels of connectivity".
Observing that while portfolio investments were good
as they leverage the power of the indian enterpreneur,
he said, "we need that, but more important is foreign
direct investment, which comes as equity or long-term
goals".
"If you want to let fdi into india in a significant
way, our people will have to create visible signs of
progress to create confidence in our foreign
investors, something that china is doing".
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