The SARS Effect

SARS in the recent past has come to become one of the most dreaded acronyms

in this part of the world and its impact on India has now become more than

apparent. The SARS epidemic, combined with the attack on Iraq and the North

Korean crisis, led to a regional uncertainty that slowed down investment and

expenditure on IT.

IDC reports that the Asia-Pacific (excluding Japan) market for IT services

showed just modest growth in first half of 2003. IDC reasons that in countries

like Hong Kong, China, Singapore, Korea and Malaysia, SARS played a massive

limiting role apart from other factors. The IDC research indicates that the top

five services vendors’ revenue grew marginally to stand at $3.04 billion in

the first half of 2003 from $2.9 billion in the second half of 2002. Another

victim of the SARS epidemic has been the Indian IT industry. Software and

services (including ITeS) export to the South Asian countries saw a decline of

13% in 2002—03 as compared to the previous year. The export figure today

stands at Rs 3116.5 crore as opposed to Rs 3,591 crore in the year 2001—02.

Even in 2001—02, the growth registered was not really a reason for

celebration. The jump in 2001—02 was a minuscule Rs 54.8 crore from Rs 3,536

crore in the year 2000—01. But 2000—01 was the year when the bubbly was

popped because the industry had registered a growth of more than 100%. It had

grown to Rs 3,536 crore from Rs 1,564.7 crore.

What remains to be seen this year is whether the shiny performance of 2000—01

was an aberration. Some analysts also attribute the extraordinary performance of

the sector to the recovery of the Asian countries after the Southeast Asian

crisis.

TEAM DQ