The Budget and Beyond

The Budget announcements for the year, coupled with the usual "State of

the Union" speech of the very erudite and eloquent Finance Minister P

Chidambaram, would well have been the anticipated non-event that the software

industry always hopes for: keep the tax incentives happy, make a few

pronouncements that reduce input costs and increase the domestic market

opportunity for IT-that's all it takes to keep most of us smiling. He did

all that this year, but then decided to provide the proverbial twist in the

tale: the enigmatic Fringe Benefits Tax that threatens to treat the many

hundreds of thousands of frequent flyer miles, that some of us clock every year,

as some kind of a joy provided by companies as a perquisite; rather than the

drudgery associated with a software exports job. Strange how one small tax can

threaten to pour so much rain on a great parade!

A lot has been done in the recent budget to address the need for supply to

keep pace with demand. The question is whether all these steps will be enough.

NASSCOM is taking steps to engage with the UGC and other government bodies to

improve the quality of faculty and provide opportunities to high class

universities to participate in the growth of the industry by setting up

Entrepreneurship Development Centers. Further steps to strengthen existing and

new institutions at the graduate and undergraduate level are on the anvil, each

of which will help the country to consolidate its position as a leader in IT in

the world.

The announcement of Rural Knowledge Centers and the Manufacturing

Competitiveness Council are also welcome moves. While one will truly take the

power of IT to the villages and enable the common man to benefit from the power

of information and knowledge, the second will not only put the Indian

manufacturing sector on the world map but also provide opportunities for the

industry to engage with its manufacturing counterparts and showcase the

capabilities of Indian software through domestic success stories-something

that has been missing for a long time.

At an invigorating panel discussion in Nagpur, at a CII session, Vivek

Tuljapurkar, VP of the fledgling local facility of Persistent Systems warned

that: "if salaries kept growing and attrition continued unabated, in IT and

even more so in BPO, no amount of pride about the world's second largest pool

of technically trained English speaking manpower would be enough to withstand

the emerging threat from many new countries. At the same seminar, two other

speakers, Ravi Pandit of KPIT Cummins and Uma Ganesh of Kalzoom talked about the

need to develop new destinations for IT and BPO. Ravi gave the example of Pune

as a second tier city which is succeeding today not so much because of any act

of commission on its part but because of acts of omission by cities like

Bangalore which have let their infrastructure lag behind growth hence opening up

opportunities. And citing the China example, Uma pointed out the need for a

holistic approach to development where the availability of golf courses and

heath clubs and pubs in a town are as important as the STPs and SEZs to attract

the out of town population that build the industry in any city.

There are many challenges. The industry has many "promises to keep and

miles to go before we sleep". But, as eternal optimists, we have an abiding

faith in the capability of our people and the destiny of our nation. Together,

with the Government and the Academia, we will make it happen!

The author is deputy chairman and managing director of Zensar Technologies

and chairman of Nasscom's SME Forum for Western India Ganesh

Natarajan