Karnik calls for expansion of domestic market

The Indian IT industry is standing on one foot at present, according to Kiran Karnik, president of the National Association of Software and Service Companies (Nasscom).

"Indian IT companies' revenues today predominantly depend on exports, which is not very good. There has to be a greater focus on the domestic market as well," Karnik said at a seminar on 'An ecosystem of innovation for a vibrant domestic IT industry', jointly organised by Nasscom and the Indian School of Business (ISB).

"Around 70 per cent of the revenues of the IT industry come from exports and the remaining from the domestic market. Besides, while the export market has been growing at the rate of around 30 per cent, the growth rate for domestic market is 20-25 per cent. Companies, therefore, need to tap the domestic market through innovation in products and services,"Karnik said.

Acknowledging Karnik's viewpoint, Karl Schubert, chief technology officer, Xiotech, USA, said the focus of the Indian IT industry was on the outbound market.

"Although dependence on the export market may be necessary for survival, focus on the domestic market is important for growth. Companies must evolve to develop the domestic IT market," he added.

Krishna Tanuku, mentor and advisor, Wadhwani Centre for Entrepreneurial Development, ISB, said that the domestic market for IT was just around $6 billion. "India spends just half of what China spends and one-third of what the US spends on IT," he added.

According to J Satyanarayana, chief executive officer, National Institute for Smart Government, IT spend is very low even with regard to the e-Governance aspect.

"India ranks 77 in the world when it comes to e-Governance. Some of the reasons for this include absence of legal framework, political will and budget constraints," he added.

Giving estimates on the size of the e-Governance market in India, Satyanarayana said the potential number of transactions annually was around 4.58 billion.

"We, therefore, need to introduce an enabling legislation for e-Governance as the IT Act in India is inadequate, create awareness of the concept's benefits among the policy-makers and promote participation of SMEs in this process," he added.