IT sector must work harder : Murthy

Infosys chairman warns against complacency.

As the Indian Information Technology (IT) juggernaut rolls on, Infosys chairman N R Narayana Murthy has cautioned home-grown companies against complacency, telling them to take up high-end work, maintain cost efficiency and protect margins with China and emerging East- Asian IT players vying for a larger share of the global IT pie.

With the Indian it industry basking in the glory of high growth even in a low tech spend last year, Murthy has given a five-point prescription for India to hit the $50 billion software exports target and the $80 billion revenue mark by 2008.

"Today, the Indian IT industry has scripted an outstanding success story and changed our standing in the comity of nations. At the same time, however, we cannot let ourselves become complacent", Murthy said.

India is facing competition from East-Asian countries such as China and the Philippines added to which "in this globalised world", customers have access to the best services anywhere, he said, emphasising, "In this context, the IT industry in India must work to stay competitive".

"We need to ensure that our IT companies move up the value chain by taking the benefits of the global delivery model to high-end activities like equity research and consulting", Murthy, whose Nasdaq-listed company was the third to join India's billion dollar IT club last fiscal, said.

"While we continue to scale up and meet growing demands, we must maintain cost efficiency and protect margins. Further, we must build brand equity for this industry globally," he added.

The chief mentor of Infosys said, a "number of steps need to be taken (by both state and central governments) to meet this target and remain globally competitive".

India's software exports grew by 30.5 per cent to touch $12.5 billion in 2003-04 and aims to match the same growth to cross $16 billion this year.

India, Murthy said, needs to increase penetration in terms of PCs and communication lines, noting that high cost of ownership is a barrier towards proliferation of devices.

Citing a forecast by Nasscom, the apex body of software companies, he said the number of Internet subscribers would increase from 2.46 million now to 7.18 million in 2005, which called for additional investments in bandwidth.

He said, the availability of a robust communication infrastructure is essential for Indian companies to effectively implement the offshore business model.

Murthy said, if the level of education in our colleges is to be improved, an impetus must be given to improving the level of R&D. "We need to ensure an adequate pipeline of English-speaking graduates," he said.

The software industry also requires good infrastructure and facilities in terms of airports, roads and electricity supply. He said as India moves towards a knowledge-based economy, protection of knowledge capital becomes essential.

He was also concerned that the software piracy rates were around 70 per cent.

"I have always maintained that the role of government needs to be limited to areas like defence, external affairs, internal security., etc".

Asked what measures india should take to stay ahead of china, which he recently said lagged just three years behind india, murthy said the competition came not only from china but also from other emerging east asian it players.

Murthy said one of the advantages for india over china was its large english-speaking population but he stressed that achieving proficiency in english was now gaining priority in china. In beijing alone, there were over a thousand language-training centres.

Additionally, "we must invest further in our supply of knowledge professionals, our basic infrastructure and our levels of connectivity".

Observing that while portfolio investments were good as they leverage the power of the indian enterpreneur, he said, "we need that, but more important is foreign direct investment, which comes as equity or long-term goals".

"If you want to let fdi into india in a significant way, our people will have to create visible signs of progress to create confidence in our foreign investors, something that china is doing".