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.

Ganesh Natarajan

Keep tax incentives happy, reduce input costs, increase domestic market opportunity-that’s all it takes to keep most of us smiling

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

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