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Mr Kiran Karnik, one of the guiding forces behind the Indian IT outsourcing story and former President of National Association of Software and Services Companies (Nasscom), is now one of the association's trustees. Prior to joining Nasscom, Mr Karnik was the Managing Director at Discovery Networks in India. Currently a part of the Government-formed panel on private-sector graft, he is also a member of the Prime Minister's National Innovation Council (NIC).
In Kolkata recently, Mr Karnik spoke to Business Line on issues relating to the global slowdown and its impact on IT industry in India, the positives for IT companies and on the subject of corruption in businesses.
Excerpts:
Do you see recessionary trends in Europe and the US affecting the IT industry in India?
So far, there is not much impact (of the recessionary trends). However, if suddenly something untoward happens in Europe, then we will be in deep trouble. Despite this year being a bad year, the industry may achieve its growth target in exports — the latest indications suggest an 18 per cent growth.
Has the previous order-book position been a reason for a muted impact?
No. There has indeed been some momentum from the past. Given the fact that both Europe and the US are now in trouble, things seem to be pretty okay. However, it is too early to speak about next year's scenario.
What are the growth projections for 2012-13 ?
Next year (2012-13) growth projections are likely to be more or less similar to that in the current year … perhaps, marginally lower — maybe a percentage point lower than this year.
Indian companies had earlier in the year expressed their interest to hike prices. Do they have pricing power left?
A hike in prices is difficult at the moment. But there has not been a drop in prices. On the other hand, depreciation of the rupee over the last six months (by nearly 18 per cent) absorbed, not all, but a large part of the costs.
IT companies are moving more into the banking, financial services and insurance (BFSI) verticals. Do you see overcrowding in the segment?
Yes, you are quite right. BFSI is big business now. And it continues to do well. But companies, which were focussed on a particular sector, for example telecom, have taken some beating in recent months.
So overcrowding won't be a problem?
No. I don't think that overcrowding would be a problem. In fact, even within the BFSI segment more new areas are opening up now.
Are Indian companies hedging a smaller part of their interests considering the volatility in the rupee and global economic scenario?
No. Not that I know of, because there is continuing concern about the volatility of the rupee. While hedging, two-way currency movements are to be kept in view. If an IT company had not taken any hedge (against rupee appreciation) during the recent rupee depreciation it would have made huge gain.
You are a part of the committee formed by the Government to look into issues of corporate corruption. What is your personal thought on corruption in India Inc?
On the issues of (corporate) corruption, I think that industry and industry associates will have to do more. There has to be some peer pressure on companies involved in corrupt practices. You cannot depend only on the law and when something is being done (to punish them).
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