Then there are the uncertainties created by tax policy. The government has extended the tax holiday for software parks (Sec. 10A & 10B) by a year, apparently in order to leave a decision with regard to a longer extension for the next government to decide. No industry can function with such short-term horizons, however, and once again while the IT majors will take only a marginal hit since they would have moved large parts of their new businesses to special economic zones (SEZs), the small- and mid-sized companies will feel the pinch at a time when margins are already under pressure. Mergers and acquisitions could then become the order of the day in the industry; one estimate is that domestic IT mergers and acquisitions could rise by 50 per cent this year.
What is creditable, meanwhile, is how the IT majors have set about tackling the challenges of a different business environment, and of dealing with the resentment created in many countries by the spread of outsourcing. At one level, they have become genuinely global companies
