Euro Gold: Will India Rush?

The stork is flying home with a good

news. No, it's not a baby. It's a bag full of gold, the euro gold. A lucrative opportunity

that has perhaps been waiting to fall into India's lap ever since Roman Emperor Diocletian

established a single currency, a primitive gold standard, 16 centuries ago. With the

semi-birth of a New Mighty Currency, the euro, will all roads lead to Rome-sorry,

Europe-for the software industry?

Software company: We are

very excited about the euro opportunity. It's really huge-maybe bigger than the Y2K, which

was $200 billion.






Journalist: What are your plans about the euro?





The company: Well, you see, we are still chalking out a strategy and things are in
a very initial stage and it's still not very clear...






Hold on to the words: It's still not very clear. No, the euro currency conversion
opportunity is crystal clear. What's not is the Indian companies' preparedness-many of

them the Software Powerhouses from the Country of Cheap Labor-to tap into the

multibillion-dollar euro conversion business.

Just imagine. Thousands of

com-panies scattered across the country churning out software exports worth only a little

over Rs7,000 crore for 1998-99 (DATAQUEST Mid-Year Review survey projections). The tens of

thousands of programmers employed with them not even knowing in which direction exactly

they are moving. Chug-a-chug, chug-a-chug...the code-billowing human machines are going on

at the beck and call of their money-raking masters.






Of course, there was, and still is, a compelling need to accelerate the software grind.
The Year 2000 computer problem gave the Indian software industry enough contracts,

sub-contracts-and sub-subcontracts!-becoming the very raison d'etre of countless software

'startups' and bringing in manna for the others. According to NASSCOM, the Indian software

industry body with about 500 members, Indian companies have already bagged Y2K contracts

worth about Rs8,600 crore. So far so good.






The most notable aspect of this Indian software 'saga' is that revenues from such orders,
almost entirely from the US, constitute a hefty part-40% as per NASSCOM. "But the

move now is to focus on areas other than the Y2K, like ERP and euro," says Dewang

Mehta, President, NASSCOM. Supporting this strategy is Saurabh Srivastava, Executive

Chairman of Delhi-based training and software export company IIS Infotech. "By the

end of this year we'll not take any new Y2K contracts," he says. "In fact we

would like euro conversion to contribute 20-25% of our total revenues 1997-98> next year."






Several other thinking heads nod in unison. Smart move? Maybe yes, maybe not. If Gartner
Group's mind-numbing figures are to be believed, the Millennium Bug, as Y2K problem is

popularly known, could bite another $400 billion dollars worldwide off companies'

ever-bloating Y2K-compliance spending beyond the year 2000. So the choice is twofold: the

Indian Y2K juggernaut can screech to a halt and look to other emerging areas like euro,

client/server, ERP etc. Or it can continue to build on the Y2K momentum. Given the

fragmented composition of the industry, there won't be a black-and-white answer and the

sundry players, for want of a strategic focus, would continue their run helter-skelter. At

least for another year or so.






The euro era


Europe's new powerful currency, the euro, heralds the dawn of an era of political and
economic unification in the continent. For the burgeoning software community in India, it

portends an opportunistic omen. So much so that euro has the potential to be called the

Next Gold Rush for Indian IT. According to Gartner Group, companies in Europe would need

to spend about $100 billion to attune their information systems to the new currency. This

involves inclusion of the euro symbol, Greek character epsilon, into keyboards, and

building currency conversion mechanisms into the back-end and front-end software of a

company's entire business operations. Euro made its debut in January this year as a

currency trading on all major stock exchanges of the world but it won't be until the

middle of 2002 when euro notes and coins start jingling in pockets and purses. The interim

'transitional' period is the time available to companies to make all their systems

euro-compliant-and to Indian software houses to make money by helping them do that.






"The total IT opportunity is about $100 billion, and I'd be happy with 5% accruing to
Indian companies," says Dr Dietrich Kebschull, Director of Indo-German Export

Promotion Project (IGEP) in Delhi. Recounting how software was included in the list of

goods traded between the two countries, he says, "Software was a very interesting

product from the very beginning. When Europeans first heard of the capability of Indian

software industry the initial reaction was shock...and now, India is recognized as a major

global player."






Player, all right. But this so-called Software Superpower must learn more rules of the
game to continue to play ball. Moving up the value chain is the only way India can meet

its target of $50 billion software export by 2008. One way to achieve it is to make euro

the linchpin of that valorous vision. However, unlike Y2K, it's not going to be a

cakewalk. "Indian programmers are not in demand, like they are for Y2K, because euro

per se doesn't require a technical skill. It's not platform dependent largely on mainframes and COBOL> but driven by functional knowledge," says Nagendra P

Bandaru, Euro Practice Manager of Wipro Infotech's ecommerce and financial solutions

business. So the demand for business analysts and senior software analysts who have worked

on multiple application areas would rise because of euro. Concurs Srivastava: "A high

level of analysis and design skills will be required...and higher level expertise> has not been the strength of the Indian industry." He further says that in

India, most companies were busy with Y2K so "they didn't even bother."






The Indian players




Some did bother, though, even if a tad late. Indian software blue-chip Infosys, for one.
The company has set up a euro consulting practice, InEuro, which proffers management and

IS workshops to create euro awareness, impact analysis, and conversion and reengineering

services to corporates. Another stalwart, Bangalore-based Wipro Infotech, through its Euro

Practice Group (EPG), claims to have trained as many as 1,000 Wiproites as part of its

continuous training program, AwarE or 'A profound thought about the Euro.' While Wipro is

looking at euro as "a major thrust area," the company didn't divulge details of

its existing conversion orders. All it would say is that the company has got several

projects ranging from the software compliance for a Europe-based Fortune 500 consumer

finance company to the re-denomination strategy for a US-based mutual fund to the

euro-compliance of a package software of a global major based in Europe.






IIS Infotech's Srivastava, too, is wary of giving details of any ongoing euro projects.
"We are probably ahead because our business is mainly in Europe,"

says he. At present there are about 50 people working exclusively on euro and, adds

Srivastava, "we will soon get more aggressive about the euro business." Projects

in hand? (That's a difficult question to answer.) "We are working on a

euro-compliance project for a large insurance company based in Europe." Delhi-based

Eurolink Systems is another company looking at the business opportunities brought forth by

the new currency. "We view euro to provide us opportunities in providing consultancy

services in making the IT systems euro-compliant by providing impact analysis, database

conversion, testing and training solutions," says Business Manager Navin Parti.

Again, the specific details about the projects or plans are hard to come by.

The quantum



In the face of lack of strategic focus of most companies, barring a few, it is difficult

to gauge the euro opportunity for India, especially in the short term. But available
statistics do give some indication to the direction where Indian software is going. As per
DATAQUEST Top 20 survey, 1997-98, only about 20% of software exports went to Europe as

against a whopping 60% to the US. While companies like Infosys, NIIT and Wipro have a

stated goal to look at the European market, most others will find it a tough task to

diversify their operations to a market they don't even have a clue to. Mix the

English-knowing middle class with some host-based technologies and you have a wonderful

concoction for Y2K work in the States. But try and mesh the software herds with the

complexities associated with the euro work and a multitude of languages and cultures, and

you get? The question mark may be bigger than the one printed after the preceding

sentence.






There are ambivalent feelings about the language and culture issue. While Parti considers
these differences to be "a very significant factor," as communication plays a

very important role in "getting and successfully completing a project," Bandaru

dismisses them as "minimal problems." The bigger problem, he says, is about

living in Europe. NIIT's Vice Chairman RS Pawar, on the other hand, feels that Indian

companies would be hard put to crack into the intra-European camaraderie that exists among

several countries with common boundaries. The most comforting answer is perhaps given by

Dr Kebschull: "The language barrier is only for the first three hours." After

that, it's business as usual.






One nagging dampener could be the confusion and sometimes unhealthy rivalry within the
software industry. By NASSCOM's own admission, not more than 10% of the euro work is

expected to be outsourced. And yet, strangely,



it estimates that Indian companies can grab about $3 billion (about Rs13,000 crore) over
the next three years-"We've rarely been wrong in our targets," says Mehta. Now

just consider this: NASSCOM projects a software export revenue of Rs11,400 crore for

1998-99. Considering that the industry grows by a fantastic 60% each year, the figure

would reach about Rs29,000 crore in 2000-01. And Rs13,000 crore accruing from euro would

mean a significant 44% out of that. Which is extremely unlikely, if not ridiculous. The

DATAQUEST Mid-Year Review survey conducted for the first half of 1998-99 reveals that

total exports to Europe have come down to 18.8% compared to 21.4% for 1997-98 (whole

year). Further, euro is only beginning to make its mark as a new business opportunity for

Indian software companies.






Not that NASSCOM is not making any efforts to help companies meet that target. It is
organizing an EU-Partneriat on March 15-16 in Delhi of about 400 companies, 68 of them

from India, which is to be a kind of buyer-seller interface meet. It will also organize

one-day workshops throughout the year to create awareness on euro. But the fact of the

matter is that a concerted effort from the big players is required to garner a sizable

portion of the euro conversion business. Sadly, that's where the 'unhealthy rivalry'

hurdle comes in. According to an industry source, many chieftains of the Indian software

companies have larger-than-lifesize egos. Needless to say, the ensuing lack of trust and

cooperation can harm the euro effort.






The alliances


About 40% of the euro conversion work is already over after Eurozone-that's the
geographical epithet given to the 11 countries in the European Monetary Union-celebrated

the Big Bang Weekend. It was the 90-hour period from early afternoon of December 31 last

year to the morning of January 4 when experts with financial institutions all over Europe

and in several other parts of the world worked non-stop on trillions of bytes of data.

This culminated in euro starting trading on the major bourses on January 4, the first

working day of 1999.






Fortunately for Indian code crunchers, a lot of working days lie ahead. But they will need
to acquire an enormous amount of learning to laugh their way to the European Central Bank.

For the software exporters, geographical presence, experience in vertical industries like

finance and manufacturing, mindshare, brand awareness, and track record would all assume

paramount significance. Says Kanak K Choudhury, Software Incharge, IGEP, "Since most

European companies, especially German software companies, specialize in vertical market

segments, it would be beneficial for the Indian software companies to have strategic

alliances with them." Even though Wipro, Infosys and some others have established

offices in the Eurozone, most others are still in a quandary as to how or whether to go

after the euro. Metamor Global Solutions India, for instance, professes to have big euro

plans but it is still developing a strategy. The good thing is that the company is putting

much stress on retraining of its employees so as to look at more emerging opportunities.

On a similar note, IIS Infotech plans to give its programmers who would be working on euro

a three-month orientation course, apart from the domain training.






It wouldn't be a surprise if the country sees a spate of advertisements for euro-related
courses within the next few months. That will be a signal of the euro market taking off.

But that might also trigger a host of fly-by-night software training and development

companies, who would just be there to make a quick buck out of the euromania. In that

situation the software hopefuls must watch out.






The godsend




A multibillion-dollar fortune-"godsend" as Srivastava calls it-dangles before
India. According to Bandaru, "Gartner report claims that the euro conversion

opportunity is $100-300 billion. I can't understand the estimate as it has got a huge

variance of $200 billion dollars." As of the current situation, he says, "the

revenues of Indian companies could be of the order of a few million dollars-not more than

$10-15 million. Most Indian companies are just opening their marketing offices in Europe,

and it would take them two to three years to mature." Sounding the alarm bells, he

further says that "by that time the opportunity in these 11 countries thus far adopted euro> would cease to exist." However, Bandaru opines that the market

size would rise as and when new European Council members, 54 at present, join in. "At

some point of time," he says, "all of them would need a single currency-the

euro."






Many others would also vouch for the uncertainty of this gold mine. But gold mine it is,
all right. However, before rushing, India must put its software act together. That would

need much more strategic focus on the issues concerning euro, besides tremendous drive and

initiative. Today, looking at the awesome figure of Y2K business-$600 billion-the software

industry must not feel complacent at the miniscule share of $2-3 billion that it has

managed to scrape up. The need of the hour is consolidation in the software industry, with

foresighted leadership and strategic, realistic vision. The fire-fighting attitude largely

prevailing in the software export industry could make Indian IT burn its fingers in euro,

too. If fortunes are to be made from this godsend, it will have to be through a man-made

giant effort.

Euro or

Y2K: What does IT matter?