IT sees opportunity loss due to Re rise: Karnik

National Association of Software & Services Companies (Nasscom) president Kiran Karnik has said that information technology and business process outsourcing industry in India is beginning to see an "opportunity loss" on account of rupee appreciation against dollar.

"The worry is that there is too much appreciation in too short a time," he said adding that a 1% rise in the rupee value would affect the bottomline of IT and BPO companies by 30 to 40 basis points.

Consequently, he said, India as a destination for outsourcing may not be as "extremely attractive" in future as it is today.

There is a feeling that the future growth of this industry is being sacrificed," he said.

In this context , Karnik said that though the industry would achieve the export growth target of 26-28% this year, he would not be able to say whether the same growth would continue five years down the line. "I have a sense that we will hit the 2010 target. But looking beyond that, I am concerned," he said.

According to Karnik,  IT and BPO companies are more affected than other sectors like textiles on account of rupee appreciation. "Our input prices are increasing rapidly while our output price is stable," he said.

Addressing a press conference at the Nasscom's 'Information Security Conclave 2007' here today, he said medium and small IT and BPO companies were the worst hit by rupee appreciation. The margins of these companies were lower than big companies and hence "they have taken a hard hit while the bigger companies handled the situation extremely well."

Hence, he wanted continuation of the Software Technology Parks of India (STPI) scheme.

Karnik feels that the number of start-up companies will decline in the absence of the STPI scheme. "People will take up jobs instead of becoming entrepreneurs as they will be unable to compete with big companies," he emphasised.

The Nasscom president said that the association was working closely with the government to suitably amend the Indian IT Act, 2000, so as to ensure the security of data and privacy protection.  Nasscom has requested the government to incorporate in the Act that  regulations pertaining to the IT industry in the country would be made in consultation with the Data Security Council of India (DSCI), a self-regulatory body set up by the association.

Shyamal Ghosh, chairman, DSCI, said that all formalities were being completed to incorporate the self-regulatory body as a non-profit organisation under the Companies Act.