Nasscom optimistic on growth despite uncertain eco environment

The global economic uncertainty has led to projected flat or reduction in budgets for outsourcing services by western clients, which has in turn sparked fears about the performance of Indian players, who get almost 80% of their revenues from the US and European markets

New Delhi: Newly appointed Nasscom chairman N Chandrasekaran on Monday expressed confidence that the $100 billion Indian IT-BPO sector will grow at 11%-14%, despite the global economic uncertainties and muted forecast by some member companies, reports PTI.

“Overall, technology has an important role to play whether you look at this year or any other year. It will play an important role in the revival of markets and businesses.

Along with that the emergence of new powerful technologies be it cloud or big data, there are tremendous opportunities globally and nationally,” Mr Chandrasekaran told reporters here.

All these things will play to the strength of the Indian IT industry, he said, adding that the software body is continuing with its 11%-14% growth forecast and will take a re-look at it in October.

The global economic uncertainty has led to projected flat or reduction in budgets for outsourcing services by western clients, which has in turn sparked fears about the performance of Indian players, who get almost 80% of their revenues from the US and European markets.

With Infosys and Wipro giving muted guidance, these fears were further strengthened. However, the performance of others like TCS and HCL Technologies did provide hope that demand still existed, even if on a smaller level.

Mr Chandrasekaran, who is also the CEO of the country’s largest software exporter Tata Consultancy Services (TCS), said there are numerous opportunities available and the focus needs to be on underpenetrated markets like Eastern Europe, Latin America and Japan.

Nasscom has also appointed MindTree CEO Krishnakumar Natarajan as vice chairman of the4 executive council for 2012-13.

Asked about the challenges being faced by the Indian companies, the senior officials said the foremost task was to tide over the current environment.

“A McKinsey estimate is that by 2020, the industry will be between $220-$300 billion and that is a huge opportunity for the Indian IT industry. There could be short term challenges but in the long term, competitiveness of Indian IT industry is strong,” he said.

He added that the industry has changed from taking orders to helping companies transform their business and this will drive the growth further.

Mr Chandrasekaran said the executive council will work on re-inventing and embracing new business models, strengthening innovation capacity and research capabilities of Indian players, strengthening long-term entrepreneurial environment.

On the issue of visa rejections, Mr Chandrasekaran said it continues to be an issue.

“However, companies are now planning to tackle this, be it through local resourcing or applying ahead of time. There is also a better understanding that it is not labour movement but that of highly skilled manpower,” he added.

Nasscom would also work on enhancing skilled talent pool in the country and focus on specialisation.

“One of the key priorities for Nasscom is to build the future companies of the industry and I look forward to take this initiative to greater heights,” Mr Natarajan said.


Core sector growth slips to 2% in March; 4.3% in FY11-12

The growth rate of eight industries which have a weightage of 37.9% in the Index of Industrial Production, in March moderated to 2% from 6.5% in the same month last year

New Delhi: Reflecting a slowdown in the economy, the growth rate of eight core infrastructure sectors dipped to 2% in March and 4.3% during 2011-12 on account of poor performance in crude oil and natural gas, reports PTI.

The growth rate of eight industries—crude oil, petroleum refinery products, natural gas, fertilisers, coal, electricity, cement and finished steel—which have a weightage of 37.9% in the Index of Industrial Production (IIP), in March moderated to 2% from 6.5% in the same month last year.

The cumulative growth rate of infrastructure industries during fiscal 2010-11 slowed down to 4.3%, down from 6.6% in 2010-11.

The dismal performance of core industries, according to experts, points to economic slowdown and will have implications for industrial production data to be released on 12th May.

“Of-course, it will affect. Not only now, it will also affect IIP in the next year due to lagged effect. It’s an ongoing problem. What we need is policy attention,” Ficci secretary general Rajiv Kumar said.

The data, he added, “reaffirms the worst fears and the economy is in a midst of a real slowdown. The government needs to take several steps.” 

As per the data released by the government, natural gas and crude oil contracted by 10.1% and 2.9% respectively.

Steel, electricity and fertiliser output slowed down by 2.3%, 2.1% and 1.5%, respectively in the month under review compared to 12%, 7.6% and 3.9%, respectively a year ago.

Crisil chief economist DK Joshi said, the core sector data “will affect the overall IIP” which will be released next month.

Petroleum refinery output dipped by 1.6% compared to 8.5% in March 2011.

However, on the positive side, coal and cement output grew by 6.8% and 7.1%, respectively.

During 2011-12 fiscal, natural gas output contracted to 8.9% compared to 10% in 2010-11.

Coal, refinery products and cement output grew by 1.2%, 3.2% and 6.7% respectively in 2011-12 compared to contraction of 0.2%, growth of 3% and 4.5% in the previous fiscal.

Electricity and fertilisers too grew by 8% and 0.4% against 5.6% and zero per cent in the year ago period.

The growth rate of crude oil and steel slowed to 1% and 7%, respectively compared to growth at 11.9% and 13.2%, respectively during the same period of 2010-11.

The annual economic growth rate has slowed to 6.9% in 2011-12 compared to 8.4% in previous two financial years.

Fragile economic recovery in the US and Europe and subdued business sentiments at home affected the growth of the industrial sector in the current year, as per the Economic Survey 2011-12.


Economy & Nation Exclusive
Telcos raising concerns against new spectrum charges for 2G

TRAI's recommendation of shifting to the higher frequency band of 1800Mhz would force all CDMA and majority of GSM operators to write off their investments and also pay additional money for the spectrum if they want to be in the business

Telecom companies, mainly Vodafone, Telenor and Idea Cellular, have raised concerns about the new recommendation from Telecom Regulatory Authority of India (TRAI) for spectrum charges and shifting to higher frequency bands.

According to a PTI report, Vodafone India has said a shift in the airwaves frequencies allotted to it to a higher band will put an additional cost burden of around Rs10,000 crore on the company which will then be passed on to consumers, leading to a tariff hike.

In a letter to telecom minister Kapil Sibal, Vodafone India's resident director for regulatory affairs and government relations, TV Ramachandran, said, “Vodafone estimates that apart from the write-off of existing investments, it will cost around Rs10,000 crore to replace its 900MHz with an 1800MHz network.”

Similarly, Norwegian telecom company Telenor said that it will be forced to exit India if proposal by the TRAI to auction airwaves at 13 times the price used in 2008 are accepted.

In its latest recommendation on “Auction of Spectrum”, TRAI has recommended that service providers using 800Mhz and 900Mhz spectrum band (being used for 2G CDMA and GSM service, respectively) to transmit signals for mobile and other wireless services should be shifted to higher frequency band of 1800Mhz after the licences come up for renewal.

The government should auction 5MHz of airwaves in the 1800MHz band and companies will have to pay a minimum Rs3,622.18 crore for every unit of spectrum, TRAI has said. This is about 13-fold increase over what the mobile operators paid in 2008 when the licences were given under the then telecom minister A Raja, when permits were bundled with 6.2MHz of 2G spectrum for Rs1,659 crore.

Mr Ramachandran said this investment in the company’s network could have been utilised for providing coverage to around 50,000 additional villages. “The investment to replace the existing 900MHz network will mean added cost burden for the operators which will translate into higher tariffs for consumers,” he said.

Another GSM service provider, Idea Cellular, at the time of TRAI’s consultation process has said that it will have to write-off Rs17,000 crore investment that the company has made in its network, if spectrum refarming (shifting) takes place.

Mr Ramachandran said Vodafone will have to install additional 20,000 telecom towers to provide similar level of coverage that it is providing using existing spectrum band. This will take around three to five years for the network to adjust with new frequencies, he added.

Telecom services providers have been protesting against TRAI’s recommendation on “Auction of Spectrum” which has recommended steep high reserve price for spectrum auction.

While the global GSMA body has said the recommended prices will discourage companies from participating in the auction, leading telecom services providers have indicated that the recommendation, if accepted, will lead to 25% to 30% hike in telecom tariff.




4 years ago

Great - now all these wonderful companies, making money out of thin air literally, on valuations, will have to work for a living.

AND match MTNL/BSNL rates.

I like that.

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