Nasscom to start initiative for innovation

To link product, SME fora

The National Association of Software and Services Companies (Nasscom) will launch an innovation initiative for the IT industry in the next two months.

Speaking to Business Standard, Kiran Karnik, president of Nasscom said, "The initiative is to encourage new ideas and developments in the IT industry in India. The initiative will cover not only IT services, but also give fair importance to the product companies in the country."

Replying to a query on the disgruntlement among small software products players in India, Karnik said, "Yes, I am aware of some perceptions that Nasscom has not been doing enough for these players inspite of the product forum. I would like to affirm that we are committed to the product area and when we present India to foreign markets we consciously push both services and products. Just yesterday we had a meeting with the product forum in Bangalore to discuss the issues that they face and the areas where we could help them out."

According to him, Nasscom does focus on products and is working on all the areas that a product company from India might need assistance, including visibility, tie-ups for marketing products abroad and even funding.

For this purpose, Nasscom will be linking the product forum with both its SME forum as well as the soon to be rolled out innovation initiative. This is a conscious decision taken in light of the fact that most product companies who need help in India belong to the SME segment.

"As entry barriers increase for services operations in India, I am sure that all growth over the next five to 10 years will have to come from new areas like products. Moreover, products have some inherent advantages. They have the ability to take the parent company to more geographies in one go, they give a company much better brand equity and also they can open the door for the entry of more services," added Karnik.

When asked about the BPO taxation issue, Karnik replied, "The industry is much younger than IT which itself has been exempted from tax till 2009. Even if you look at it as part of the services industry, these services are being exported and exports are not taxed. Also the industry does pay the government a huge amount of tax indirectly by way of the number of people it hires."

Adding that almost all countries had pet industries whose interests they protected by way of sops "" agriculture in Europe and manufacturing in China "" he said that as BPO presented a 'winning streak', protecting it till the time it stabilises could prove beneficial.

Earlier in the day, addressing a press conference on the sidelines of the Nasscom Quality Summit in Bangalore, Karnik spoke at length about Nasscom's efforts to improve the talent pool in the country to facilitate growth in BPO as well as higher end R&D work in the IT services domain.