'India will become global leader in software services'
The Indian software industry may be facing hard times, but Infosys CEO and MD S Gopalakrishnan says India will emerge global leader in software services.
By Gouri Agtey Athale, TNN |
PUNE: The Indian software industry may be facing hard times, but Infosys is bullish about future prospects. Infosys CEO and MD S Gopalakrishnan (Kris) says India will emerge global leader in the software services industry. Mr Gopalakrishnan feels the threat of low-cost locations in other parts of the world is being played up.
| S Gopalakrishnan |
He says, “India will have the largest location for software services companies. India already has the highest number of software professionals in the world. India will be the primary or largest location for all these companies and the leadership will be here,” Mr Gopalakrishnan (Kris) said. He added, “The global delivery model will be the primary model everywhere and companies which have embraced, understood or leveraged it, will benefit.”
Mr Gopalakrishnan is confident that threats from other locations will be tackled. “First of all, the pie is large enough for multiple country locations, so there is less of a threat than we make out. Each country has a unique advantage. For instance, east Europe can support western Europe because of language and close physical proximity. All locations will leverage their unique advantages. So, Infosys is setting up operations all over the world. There is competition, but the Indian industry has size, depth, talent pool, cost advantage and favourable government policies,” he added.
While he declined to comment on the outlook for Infosys, since this is a silence period prior to its half-yearly results, Mr Gopalakrishnan said that the company is moving all new projects to locations inside SEZs.
“As companies move newer businesses to SEZs and sunset clause on the STPI scheme sets in, the tax liability will initially be higher but over time, it will come down. For Infosys, for instance, the tax liability will first increase by 2010, but it will go down as more work moves into SEZs. All our new locations, Mangalore, Chennai, Hyderabad, Pune, Chandigarh, Jaipur, and Mysore, are in SEZs,” Mr Gopalakrishnan said.
He listed several reasons why Indian software services companies, which have so far not targeted the domestic market, will do so. “The first reason they will do so is because of the natural hedge this offers against currency fluctuation.
Besides, India is set to become a significant global economy which cannot be ignored. However, there is a structural disadvantage for us, so that we will have to pay tax for Indian work and do more to maintain margins. But Infosys has always been in the domestic market with Finacle, our product for the banking industry,” he said.
While Pune is set to emerge as Infosys’ single largest location, in terms of sheer employee numbers, Mr Gopalakrishnan said Mysore will remain its largest centre in terms of land holding, since the Infosys campus is located there.
Mr Gopalakrishnan is confident that threats from other locations will be tackled. “First of all, the pie is large enough for multiple country locations, so there is less of a threat than we make out. Each country has a unique advantage. For instance, east Europe can support western Europe because of language and close physical proximity. All locations will leverage their unique advantages. So, Infosys is setting up operations all over the world. There is competition, but the Indian industry has size, depth, talent pool, cost advantage and favourable government policies,” he added.
While he declined to comment on the outlook for Infosys, since this is a silence period prior to its half-yearly results, Mr Gopalakrishnan said that the company is moving all new projects to locations inside SEZs.
“As companies move newer businesses to SEZs and sunset clause on the STPI scheme sets in, the tax liability will initially be higher but over time, it will come down. For Infosys, for instance, the tax liability will first increase by 2010, but it will go down as more work moves into SEZs. All our new locations, Mangalore, Chennai, Hyderabad, Pune, Chandigarh, Jaipur, and Mysore, are in SEZs,” Mr Gopalakrishnan said.
He listed several reasons why Indian software services companies, which have so far not targeted the domestic market, will do so. “The first reason they will do so is because of the natural hedge this offers against currency fluctuation.
Besides, India is set to become a significant global economy which cannot be ignored. However, there is a structural disadvantage for us, so that we will have to pay tax for Indian work and do more to maintain margins. But Infosys has always been in the domestic market with Finacle, our product for the banking industry,” he said.
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While Pune is set to emerge as Infosys’ single largest location, in terms of sheer employee numbers, Mr Gopalakrishnan said Mysore will remain its largest centre in terms of land holding, since the Infosys campus is located there.
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