The Hindu : Software exports to double this year

Online edition of India's National Newspaper
Saturday, Oct 19, 2002

Southern States

Southern States - Karnataka

Software exports to double this year

By Our Staff Correspondent

MYSORE OCT. 18. Beating last year's downtrend in software exports brought about by recession in the IT sector, software companies here are poised to register over 100 per cent growth in exports during 2002-2003. The earnings are expected to be Rs. 80 crore.

Last year, the growth rate was just 35 per cent and the earnings Rs. 39 crore. This was better than the rate ranging between 28 per cent and 31 per cent predicted by Nasscom. The IT majors, Infosys and L&T, are expected to contribute more than half the exports this year. Those from 19 small and medium enterprises registered with the sub-centre of the Software Technology Parks of India here will make up the rest.

G.L. Prasad, officer in charge of STPI, said the trend of better export performance by SMEs would be more pronounced next financial year as most of them were being expanded. The IT majors were planning to expand their employee base. The drastic improvement in exports had been attributed also to the change in the export basket that earlier depended heavily on the U.S. market. While exports to the U.S. stood at 69 per cent earlier, it had come down to 49 per cent with more orders coming from European countries such as Germany, Austria, and Norway, and those in the Asia-Pacific. The infotech companies here were catering to the divergent needs of 17 countries.

It is learnt that the software market in the U.S. is showing signs of picking up, and a few SMEs here have bagged orders from companies in that country. Most small infotech companies have a turnover of over Rs. 1 crore, and experts take it as a good trend.

Mr. Prasad said software exports from the city were worth Rs. 80 lakh during 1998-1999 when the STPI sub-centre was set up with two registered companies. The performance of the sub-centre was believed to be one of the best. Quality of service was of international standards, and this had aided the growth of companies.

He said another positive trend was that six companies which did not start operations after registering with the STPI prior to March 31, 2000 were also establishing their units here. One of them had commenced operations after bagging orders from a U.S. company. The companies had to commence operations within three years to take advantage of the 10-year tax holiday announced by the Government.

Mr. Prasad said the STPI was planning incubation centres for start-ups. Such facilities were available in Mangalore, Manipal, and Hubli. It was learnt that the SJCE-STEP was also establishing incubation centres. The facility would be ready in six months.

On the tension in Mysore and Mandya over the Cauvery issue, Mr. Prasad said the recurring trouble might have an adverse impact on investments by infotech companies.

Although the Mysore IT Forum was vigorously campaigning for the improvement of the IT sector, such disturbances might force entrepreneurs to cancel or postpone their investment plans. The service-level agreements reached by infotech companies with their clients in the West were stringent on targets and deadlines, and the quality of service.

Deviations attracted penalties, and if repeated, the client might withdraw from the agreement causing heavy losses to the companies.

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Software exports to double this year