The only reliable thing about projections is that they are always wrong. The clever investor merely guesses right about the direction. If the official projections are an underestimate, he buys with a safety margin.
A more difficult decision is involved when overestimation may have occurred. Most people believe projections until they are proved wrong. An industry with inflated estimates will shoot up in price over the short term. A clever investor may buy, hang on till the crest of the wave, and book profits.
The Nascom-McKinsey (NM) projections for Indian information technology and IT Enabled Services (ITES) are now out. These are more downbeat than the 1998 estimates but still rosy. The normal principle of translating dollars to rupees is not being followed here, because that involves guessing dollar-rupee rates over 2002-08.
Also Read
In the 2002 NM report, products and services (P&S) have been downgraded to $11 billion by 2008, versus earlier estimates of $19.5 billion. ITES estimates have been hiked upwards to $24 billion in exports alone versus earlier estimates of $19 billion for export plus domestic.
Indian IT and ITES firms are looking to raise enormous sums via IPOs in this fiscal itself. Total IPOs could be in the range of $6 billion in 2002-03 and much of that could come from firms such as Tata Consultancy Services, Idea Cellular, Spectramind, etc.
A threat to ITES comes from technology. Technology has already killed one ITES business. The transcription market was destroyed by reliable voice-recognition (VR) software. VR allows doctors and lawyers to dictate notes as documents rather than as audio files requiring clerical transcription.
Another emerging technology could undermine India