Is the growth sector of the Indian liberalised economy losing its charm? Has the software sector reached the saturation level?

A few questions arise when one considers the slow down in the US markets. The US is India's biggest customer with more than 50% of the exports. The current slowdown in the US has made many people wonder whether software and IT is the best career option for the new graduates of the 21st century.

Tracking the IT boom
The Indian IT boom started in the early nineties. This was primarily to take advantage of the cost factor.(the difference in salaries between U.S. and India) With the Y2K bug approaching, Indian companies made the real foray into the US market. Post 1995 a lot of Indians also started taking assignments in US. The next phase for super growth was ERP. ERP at that time was like a god send gift for Indians interested in the career shift to IT or looking for jobs abroad. Many training institutes were started for ERP packages such as SAP, Peoplesoft, Baan and Oracle Financial / Manufacturing. The next to bolster opportunities for Indians and in turn the tech savvy image of Indians in US was the Internet. Developing web sites and Ecommerce Applications threw open a lot more opportunities.

DO(ub)T. com
The dot.com fever has gripped even our own country. With foreign venture funds offering loans at attractive rates a lot of Indian companies set up their own dot. com ventures. A Dot.com is nothing but a brand building exercise for an Ecommerce application. The major line of thinking of the dot.com is that “Market Share” is more important than short term profits. Thus a pioneer in Ecommerce – Amazon.com is a market leader but has neither generated a profit nor does it look likely that it will be out of the red in the next 2-3 years.
The theory may look funny now, but was mantra of success for the dot.com ventures. In India also the leading portals advertised a lot to build a brand image, but not many are doing well. a point to be understood is that less than 12% of the revenue of Indian software companies comes from dot .com ventures. so the fall of the dot.com business is not to much worry about.

OFF Shore Development – The Silver Lining Despite the problems of the UIS slow down, the Indian software companies catering to the overseas customers will continue to grow at the current pace. This is simply because as Technical budgets are slashed in the US, outsourcing to countries such as India and China is very lucrative.

Item	1990	2000	Increase
Hardware	$ 7.6 million	$ 11.7 million	53%
Personnel	$5.6 million	$ 7.7 million	37.5 %
Outsourcing	$0.8 million	$2.3 million	187.5 %
Software	$1.1 million	$5.6 million	400%

(A study by 27 clients by Consultancy firm Compass shows that IT outsourcing and software development are the fastest growing components of the IT spread) Source Business World
The above table makes it clear that offshore development companies will continue to get huge overseas project which would be implemented in Indian cities.

The new Growth Areas
So what are the new growth areas? The new areas are Telecom software and M-Commerce. In the US, the market is very much underdeveloped for such applications and is going to see the most action. Career options would vary for freshers and experienced software professionals.
Candidates who are interested in making a shift to software development from their current non IT related jobs should try to get skills in WAP, Bluetooth, HDML etc. which will be in demand.¹
Candidates who are already in software field should leverage their skills by adding technologies such as Distributed Computing (EJB/ CORBA)² or XML and increasing the exposure to the evergreen UNIX flavours – (Solaris and HP)

The article has been written by Sandeep Tapaswi, Director Fands Infotrainers and can be reached at  sandeep@fandsindia.com