Expert Answers: IT cos will benefit from STPI extension

IT(S) HERE TO STAY: S L Narayanan, CFO, Symphony Services answers Budget-related queries on IT and outsourcing.

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Keywords: Outsourcing, ITeS

With just a couple of hours left for P Chidambaram's seventh Budget, all eyes are set on the Finance Minister. What will it have for the outsourcing sector?

Can the IT/IteS sector expect any sops? Will there be any extension in the STPI scheme?

IBNLive organised an online chat with S L Narayanan, CFO, Symphony Services in order to throw some light on the above questions and more.

Tarun: Do you think that with elections in mind, the Finance Minister will even address a non-political entity of IT or BPO business and just focus on the agriculture sector?

S L Narayanan: I don't think the FM or his Government is unmindful of the contributions made by the IT/ITES sector on employment generation and forex earnings. The ecosystem that we have created can bring in several thousand more jobs from the US and the Western world, if we persevered with the right policy initiatives.

Anurag: Do you think the FM will table a pro-agricultural Budget? How does industry stand to benefit? Can the IT/ITeS sector expect any special treatment?

S L Narayanan: Agriculture is our mainstay and deserves to get a big push. Farmers that prosper will in turn constitute the markets for our industry, ranging from tractors to toothpaste. With regards to IT/ITES, it is our fervent plea that the FM extends the STPI scheme for atleast five years. It is a fact that the prospects for IT/BPO industries have been indifferent in recent months, with the current situation in the US, i.e., the credit crises and a rapidly decelerating global economy. It would be an inopportune time to make the fiscal environment for our companies even more challenging. More importantly several locations in neighboring region - most notably China, Philippines and Sri Lanka present increasingly viable alternatives that could undermine the India value proposition.

WW: Obama has declared that he will give tax benefits to companies who are not sending jobs overseas. Do you think this can be a threat if tax benefits etc make it cheaper to get the work done within the US?

S L Narayanan: Unless we see the proposals in fine print, I think it will be premature to comment.

K Mukundan: How does one manage the war for talent in outsourcing industry? When we are now seeing scarcity, could this lead to some opportunities being lost in the outsourcing sector? What is your opinion on how India needs to bridge the supply of skilled manpower gap?

S L Narayanan: I expect the FM will do something in this Budget to incentivise corporate-led investments in training and HR development.

Mebvric: Is India losing its low-cost outsourcing image as the country grows? With other countries coming up with low outsourcing models, what do you think of the future of this industry? What are the growth areas – bulk work or in expertise work?

S L Narayanan: I think India will continue to be an attractive destination, simply because of the ecosystem that has been created. The numbers that graduate annually offers a scalability advantage that the very few other nations can match; the English language skills are another plus point.

AJ1: How do you see rupee appreciation against dollar -- opportunity or threat to Indian IT industry?