Levies stifling IT growth: Karnik

Kiran Karnik, president of National Association of Software and Service Companies (Nasscom), is pained at the slow growth of the domestic IT sector and blames the numerous levies and barriers on hardware for hindering growth.

"While the levies are 40 per cent here, it is only 15 per cent in neighbouring China," he pointed out while addressing a press conference here.

Karnik also agreed that the Chinese domestic market was three times the size of the domestic market and that by itself helped the China's domestic IT industry, but said that the levies there were also low. He admitted that the Indian IT sector still had a long way to go and said that the industry offered challenges and opportunities in equal measures.

He said that there was a time when the IT sector had been dismissed as a "bubble that would soon burst." This did not happen and now even after the global economy suffered a slowdown, Indian IT exports surged to a magnificent $12.5 billion.

"We have to step up efforts to quadruple IT exports to $50 billion by 2009," Karnik said, adding that this would entail an year-on-year growth of about 33 per cent from the present 27 per cent.

Talking on the sidelines of an IT seminar jointly organised by Nasscom and Vidarbha Economic Development Council (VED), he confessed that Nasscom's figures were not officially endorsed by the government.

"Our calculations show that we are contributing 3 per cent to the GDP and should be doing 8 per cent by 2009. Though the government accepts these figures, it is quite tricky for we have had to use cost-based pricing to arrive at these figures. All this should change next year when the government comes out with transfer-pricing norms which are more transparent and agreeable," he maintained.

Speaking about the employment potential of the sector, Karnik said that it should absorb 2.1 million people by 2009. The industry, at present, is giving direct employment to 8 lakh in IT and related areas.

"The thing to note here is that true computer professionals will only form half of the 2.1 million while the other half might not even have any relevant computing skills - just the all important talent of dealing with customers to work in the fast-growing BPO field," said Karnik.

According to his association, this futuristic figure could be broken into 1 million (10 lakh) employed in BPO operations and 1.1 million who would be "what we consider to be true IT professionals."

To this end, Nasscom will be trying to guide educational institutes and other allied training centres to incorporate BPO-related skills in regular courses.

About piracy, Karnik admitted that it was a worrying issue with a whopping 60 per cent of all software being used in the country coming in that category.

"Nasscom has been trying to counter this by holding classes for the police and other authorities where they are taught how to detect piracy and even how to collect evidence. A good example of this is the Mumbai Police's cyber crime lab," said Karnik.

He refuted any notion of IT not permeating down to rural India by citing two successful examples of 'Gyandoot' in Madhya Pradesh and ITC's 'e-Choupals'. e-Choupals have reached some 6,000 villages now.

"Gyandoot is especially a good example of farmers and villagers who benefit from access to caste forms, loan applications and even come to know of the correct rates for their produce prevailing in the market - thus arming them with the prerequisite knowledge to bargain well with the traders and middle men. This only needs to spread more," he said.

Karnik also acknowledged that the spread of broadband in the country was being done at too slow a pace. "While we have a committed telecom minister, we need the broadband connectivity to spread at a much faster pace. Some sort of triggering is needed here like that seen in the cellphone sector," he opined.

As for Nagpur, the Nasscom president called for more connecting flights and a better mass-transit system in order to help the city take off as an ideal IT industry site.