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ASEAN: McKinsey sees good prospects for IT firms

Syed Amin Jafri in Hyderabad

A McKinsey-FICCI report on boosting trade and investment between India and the ASEAN countries foresees multiple opportunities for the Indian and ASEAN companies for working together in the information technology sector.

Making a presentation on 'Opportunities for Business Synergies,' during the sector session on knowledge economy-IT at the India-ASEAN business summit here on Friday, Alkesh Wadhwani quoted the McKinsey-FICCI report which envisaged collaboration in the embedded software development, development and marketing of industry-specific solutions, and setting up new development centers in Vietnam, Malaysia and other ASEAN countries.

The Indian software and IT-enabled services industry is on track to achieve its long-term potential of $70-80 billion by 2008.

Four powerful forces are driving the growth of this industry in India. A large mass of potential blockbusters is set for take-off. Familiarity and experience with offshoring is dramatically increasing the breadth of service lines.

Significant under-penetrated segments exist at both country and industry levels. As offshoring become more mainstream, global majors experience increasing pressure to move a significant portion of their work to India, the McKinsey-FICCI report pointed out.

"Offshoring is now rapidly becoming mainstream and there is widespread recognition of India's value proposition. Customers are inclined to significantly increase offshoring to India. Leading global companies have rapid ramp-up plans for development centers in India. Hence, India will continue to be the preferred destination for IT sector," the McKinsey-FICCI report explained.

Stating that embedded software is a $16 billion market worldwide, largely focused on five key verticals and two horizontals, the report said that "Indian companies are already building a sizeable presence in R&D services/embedded software. The 2002 revenues from R&D services in India are estimated to be $ 600 million."

Echoing the projections of McKinsey-Nasscom study, the McKinsey-FICCI report pointed out that achieving its long-term potential would dramatically change the face of the Indian economy.

The contribution of the Indian software and IT-Enabled Services industry to India's GDP would grow from just two per cent now to 10 per cent by 2008.

IT software and ITES exports would constitute 30 to 35 per cent of all exports in 2008. The IT/ITES industry would create three to four million jobs and the global industry would put India firmly on the world technology map.

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