GOVT EXTENDS TAX CONCESSIONS ON STPI BY A YEAR

New Delhi/ Bangalore/ Mumbai/ Hyderabad
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In a much-awaited relief for the IT industry, software companies can now enjoy benefits of the Software Technology Parks of India (STPI) scheme for another year. The government has extended the tax concessions under Section 10A of the Income Tax Act to March 2010. The scheme was to expire in March 2009 under the sunset clause provided in the scheme. On an average, IT companies would get a revenue benefit of at least 5-7 percent — on the effective tax rate — because of this extension. Normally, companies have about 50 percent business located in technology parks, export revenue from which is fully tax-exempt.

In a letter to the prime minister, Union IT & communications minister A Raja said: “I thank you on behalf of my ministry and the entire IT industry for your far-sighted decision to extend the STPI scheme. This will certainly help the IT industry, especially the small and medium enterprises which have been under tremendous pressure due to the rupee appreciation, wage inflation and several other factors. This would give us the encouragement to build up the momentum to meet our commitment of achieving IT exports of over $60 billion by 2010.” The relief has come after intense lobbying from the communications ministry and the industry. Finance minister P Chidambaram made the announcement in Parliament on Tuesday.

The move will benefit smaller companies more because SEZs have remained off-limits for them. “This is a good move and benefits small- and medium-sized companies who were finding it difficult to move into SEZs due to space crunch and high rentals. Most of the larger companies are already pursuing their SEZ plans aggressively. This move will enable them to enjoy the tax benefits further,” said Infosys Technologies CFO V Balakrishnan

However, the biggest of all bonanzas lies in the fact that the small firms will get about two years to chalk out their future. For instance, those like KTwo Technology, an IT services start-up with revenue of $1.58 million in the first year of its operation, stands to benefit immensely. As its CEO Ananth Koppar put it: “At least, the small companies will get a breather for one more year.”

While welcoming the extension, Satyam Computer Services said an extension for a longer time period was desirable. “An extension for a longer period would have been more beneficial. Still, we are appreciative of the finance minister’s move to back a sector that creates large direct and indirect employment opportunities,” Satyam CFO Srinivas Vadlamani said.

The industry had been asking for an extension of another 10 years, at least for those companies which have not benefited from the sunset clause. However, the measure is likely to provide immediate relief to the sector hit hard due to sharp rupee appreciation in the past one year. “This is a welcome relief for software companies. Now, we have about two years to take the matter of providing further relief, at least to small and medium companies. In the next two years, we would try to persuade the government to give some special incentives to the firms based in tier-II and tier-III towns,” Nasscom president Som Mittal said.

Communications minister A Raja had last week written to Prime Minister Manmohan Singh asking him to interfere in the matter. Raja had argued that as the commerce ministry had announced extension of tax concession for 100 percent export-oriented units (EoUs), the same should be applied to the IT companies, too.

Under the STPI scheme, companies are totally exempt from any kind of corporate tax on software exports. Extension of the scheme would result in companies paying an effective tax of about 22-23 percent on the same. “Had the scheme not been extended, software companies’ total tax outgo may have gone up by 5-7 percent,” MindTree Consulting chairman and managing director Ashok Soota said.

Industry players have also expressed their hopes for further extension of the scheme because of its larger role in the country’s economy. “The extension of the STPI scheme will further strengthen the IT industry and hopefully, pave the way for further extensions,” TCS CFO and ED S Mahalingam said.

 

CAN INDIA INC PLAY THOSE NUMBERS AGAIN?

Vyas Mohan
Hindustan Times (Delhi edition)

The past looks good. The future is a bit tense, though.

India Inc has once again managed to wade through unclear waters of a sluggish, struggling global economy to notch up healthy numbers for the last quarter and the financial year that closed in March. Though there has been some slowdown in profit growth, it has not been to the extent analysts and investors have been worrying about.

Acknowledging the feat, the 30-share benchmark index of the Bombay Stock Exchange has gained about 10 percent since April 1, when the results season kicked off and revisited the psychological threshold of 17,000 in the process.

"There have not been any massive negatives in fourth quarter corporate results as was widely expected. And that is a positive," said Andrew Holland, managing director of Merrill Lynch for India.

With the sub-prime loan crisis that broke out in the US in May 2007 has hit profits and outlooks all around, a substantial blip was also expected in the profits of Indian companies. Consequently, a clutch of brokerages had downgraded the result expectations of mostly export-dependent companies, especially those in the information technology and pharmaceutical sectors.

"Technology, telecommunications and pharmaceutical companies have beaten Street expectations, which is a good sign," said Holland.

With US financial giants trimming down operations following huge sub-prime losses resulting in a negative outlook for IT and IT-enabled service companies that derive more than 70 percent of their revenues from the US, an already huge subscriber base was expected to caused a shrinkage in telecom companies' revenue growth as well.

With Infosys posting a 20.4 percent growth in revenues year-on-year and the country's largest cellular operator, Bharti Airtel, recording an impressive 45 percent growth in revenues for the fourth quarter ended March 2008, the fears proved to be unfounded.

Markets cheered the results with shares of Infosys gaining 6.2 percent on the day it announced results, while the Sensex gained 2.1 percent or 346 points the same day

However, some market experts feel that it is too early to rule out a slowdown in Indian corporate profits.

 

INDIA INC HIRING OUTLOOK DECLINES 6 PERCENT FOR Q1

New Delhi
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The slowdown in the global economy and rupee appreciation are expected to throw a spanner in India Inc's recruitment plans, with the hiring outlook for the April-June period declining by 6 percent over the previous quarter, a latest survey says.

According to a staffing firm Teamlease, the net employment outlook index has dipped 6 percent from the previous quarter to 74 points, while there is a 9 percent fall in the business outlook index to 70 points over the corresponding period last year.

"With the not so positive pointers in the market right from dollar depreciation, sub-prime fiasco followed by US recession and finally the Indian bourses down has definitely impacted the employment growth in the last few months."

The IT & ITeS sector is the worst hit; with the US economy conundrum having an implication on hiring sentiments with a wait and watch approach in India," TeamLease Services Vice- President Sampath Shetty said.

The current financial market has influenced the not so optimistic business outlook over next quarter, which has had implication in the engineering sector. But with the India growth story fundamentally well grounded, it has resulted in encouraging hiring plans by the retail, FMCG, telecom and insurance sectors, Shetty added.

Besides, there has been a considerable rise in index points of infrastructure (at 90 points). Telecom sector (at 93 points), which was included in the quarter of October-December 2007 has the highest index points.

Shetty added the infrastructure deficit in the country has kept the momentum of FDI influx consistent, which has stimulated humongous job opportunities in this sector.

However, IT, manufacturing and engineering sectors have witnessed a gradual fall in the employment outlook for the April-June quarter.

With the new fiscal year setting in, business confidence looks grim especially in the IT & ITeS front. At this stage, the challenge for organisations would be to consolidate their resources to optimal productivity, Shetty said.

The hiring trend in Class I cities are increasing compared to the metros, however, the hiring from Class II, III and rural areas has decreased, the survey stated.

Among the cities, there is an increase in employment outlook index points of Mumbai, Delhi and Pune cities, while there is a decline in index points of Bangalore, Chennai, Hyderabad, Kolkata and Ahmedabad.

 

RECRUITMENT TO TAKE A HIT

Hyderabad
The Economic Times

Reflecting a rather cautious outlook on business growth, Satyam Computer Services has signalled a slowdown in its recruitment targets. The company, which added 18,000 employees in 2007-08, will see a gross addition of 14,000-15,000 people in 2008-09.

“We will monitor the situation from time-to-time. And if there is a business demand, we will act accordingly,” said Satyam chief financial officer V Srinivas. The company has also kept a tight check on wage inflation over the years and the hikes this fiscal will be moderate. Domestic salary hikes in 2008-09 would be in the 12 percent-14 percent range while onsite will be brought down from 6 percent two years ago to 3 percent-4 percent. For the past two years, the company has been progressively checking wage hikes from 18 percent for offshore employees. Satyam has brought down its attrition in Q4 FY08 to 13.09 percent from 15.7 percent in the same period last year. Its onsite utilisation rates were up at 97.33 percent for Q4 FY08 while its offshore loading rates, including for trainees, showed an uptrend at 81.84 percent. Satyam added 1,122 employees including 679 trainees in Q4, taking its total strength to 45,969.

 

TCS MAY GO SLOW ON WAGE HIKE IN FY09

Mumbai
The Economic Times

Tata Consultancy Services, India’s largest software exporter, has come out with conclusive evidence of the slowdown in global demand for outsourcing.

The company saw project delays in the fourth quarter to March 2008. As a result, the company’s net profit fell sequentially. Revenues lagged market expectations, pricing suffered and contracts did not ramp up as planned. Long-term prospects, however, are intact, say senior company officials.

Unveiling quarterly and full-year financial results, top TCS officials said the company would maintain the pace of hiring in spite of the short-term pain and keep gross staff addition at 30,000-35,000 in the year to March 2009.

“Ramp-ups did not happen. So the revenue projections did not follow and the net income dipped. But still, we expect good growth in 2008-09,” said N Chandrasekaran, chief operating officer.

Coming after muted financial outlooks given out by Infosys, Wipro and Satyam, TCS’ prognosis indicates that the next two quarters will see revenue growth shrink as customers battle the impact of US economic slowdown and multi-billion dollar subprime write-downs.

Indian IT companies will also see pressure on profits, given currency fluctuations and wage increases. “We will be watchful of the external environment in the US and the UK,” said S Ramadorai, CEO and managing director.

TCS is chasing around 25 deals each potentially worth over $50 million or more, Chandrasekaran said. The company also expects two or three deals in the domestic market every four months.

Perhaps in a reflection of caution, TCS said its wage increases this fiscal will be in the range of 8-10% as against 13-15% last year. Chandrasekaran also added that the company had seen a dip in pricing for projects being ramped up during the fourth quarter.

For the full year, the company posted a total revenue of Rs 22,861.4 crore, representing a growth of 22.7% under US accounting standards. Net income reached Rs 5,019.1 crore, a growth of 21.5%. However, profits fell 5.6% sequentially prompting disappointment among equity analysts.

In dollar terms, the net profit fall was even steeper at 7.25%. “The fourth quarter numbers don’t look good. But the gross addition of 35,000 employees should translate into a 23% growth in volumes. This quarter seems like temporary aberration,” said an IT analyst who did not want to be named. The TCS stock ended 0.8% lower at Rs 992.55 on the BSE, ahead of the results on Monday.

 

Rs 10,000 CRORE PUSH FROM STATES TO POWER IT FIRMS

Utpal Bhaskar and Regina Anthony, New Delhi
Mint

India’s state-owned power utilities are getting computer-savvy and will place, before March 2009, orders for Rs10,000 crore of software that can help them manage their distribution networks better.

The size of the order, the largest to be placed by power utilities, is likely to come as welcome news for software firms, both local and global, that are gearing up for a short-term slowing of business on account of the recession in the US, the largest market for software.

The software initiative is part of the government’s Accelerated Power Development Reform Programme (APDRP), which aims to improve power distribution systems across the country. “The tenders for the (systems that allow) IT-based electricity flow (and) accounting and auditing software will be awarded within this financial year (2008-09),” said a Union power ministry official who did not want to be named. The power ministry will fund state governments, which, in turn, will get their distribution utilities to place orders for the software.

Power shortages due to limited generation capacity and growing electricity theft have been identified as one of the key infrastructure bottlenecks threatening India’s ability to sustain an economic growth rate of more than 8 percent. Around 34 percent of power generated in India continues to be lost due to theft and pilferage. The country has an installed capacity of 141,000MW.

APDRP was created for upgrading distribution systems, minimizing transmission and distribution losses, improving metering, and assigning responsibility for realization of user charges. The scheme has been a failure and did not meet the deadline of 2007 for reducing transmission and distribution losses to 15 percent as envisaged in 2000-01 when it was conceived.

“We had a meeting with leading IT and software vendors through the aegis of Nasscom (India’s software lobby group). Firms such as Infosys Technologies Ltd, Tata Consultancy Services Ltd (TCS), International Business Machines Corp. (IBM) and Satyam Computer Services Ltd have evinced interest. We will shortly be taking the proposal to the cabinet for clearance,” the power ministry official added.

Spokespersons for IBM and TCS declined comment. “The power sector is opening up and IT can play a major role in bringing about standardization, transparency, revenue realization and transmission and distribution losses in the sector. Technology innovation can only benefit the sector,” said Ranjan Tayal, head, India region, Satyam Computer Services.

The Rs 10,000 crore given by the Centre to the states will initially be treated as a loan. After the states introduce IT-based electricity flow (essentially power supply through distribution networks managed and monitored through computers), and accounting and auditing software, the loan will be converted into a grant in phases based on targets in terms of reduction in transmission and distribution losses.

 

INDIA HAS SECOND-LARGEST NUMBER OF HOMEGROWN COMPANIES

Pramugdha Mamgain, New Delhi
The Economic Times

India has the second-largest number of homegrown corporate champions holding their fort against the might of multinational giants, according to a recent Boston Consulting Group (BCG) report.

The country was ranked second behind China among the ten rapidly growing economies in terms of number of such homegrown leaders.

Consultancy firm BCG short listed 50 home-grown companies from developing economies such as Brazil, China, India, Indonesia, Malaysia, Mexico, Poland, Russia, Slovakia and Thailand that are leading their domestic markets and fending off fierce competition with innovative business models.

While 15 companies were short listed from China, 11 Indian companies made it to the list. The Indian firms include Apollo Hospitals, Bharti Airtel, CavinKare, Gujarat Co-operative Milk Marketing Federation (GCMMF), ICICI Bank, The Indian Hotels Company, ITC, NIIT, SKS Microfinance, Subhiksha and Titan Industries.

Of the 50 global homegrown champions, 21 had revenues exceeding $1-billion in 2006 and the entire group’s sales had risen by about 50% between 2005 and 2006, the report revealed. For instance, in India, Bharti Airtel has maintained its leadership in the booming telecom market by taking on Hutchison Telecom, which later sold its Indian operations to Vodafone in 2007.

Among other examples, GCMMF, which markets dairy products under the Amul brand, has given tough competition to foreign majors such as Cadbury, Nestle and Unilever. ITC leads in the ready-to-cook segment in India.

In the banking sector, ICICI Bank, India’s largest private sector bank, has maintained its leadership position, competing with the likes of Citibank, HSBC and Standard Chartered. There is a catch though: Indian laws don’t allow foreign banks to expand their operations in the country beyond a certain limit.

IT education and training major NIIT has left US-based Lionbridge behind. Watch major Titan is way ahead of its competitors, Japan-based Citizen and Swiss watch maker Swatch, in the Indian watch industry.

The report also throws light on successful strategies that the homegrown companies have in common. Unlike global companies, local leaders are not constrained by existing product offerings. Instead, they customise products and services to meet different requirements of the consumers.

These leaders, the report said, turn globalisation to their advantage by deploying the latest technologies. Besides, many homegrown champions find innovative ways to benefit from low-cost labour pools and go national to prevent regional rivals from challenging them.

 

IT INDUSTRY GOES SLOW ON HIRING, COURTESY US SLOWDOWN

New Delhi, April 21, 2008
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The Indian IT industry, which has been on a hiring spree for the last two years, appears to have been hit by the US slowdown with recruitment firms saying the software companies are trying to cut down on new additions.

Although Indian IT companies are venturing into the European market, the US still accounts over 70 per cent of their revenues. Any slowdown in this market will impact the margin and profitability of the IT companies, which are now looking to cut costs on possible areas like excessive hiring.

"There is a definite decline in the recruitments in the last two-to-three months. This is prominent in the IT services segment and not so much in the Business Process Outsourcing and product development segment," Unit Head of Kelly Services, India's IT recruitment cell at Hyderabad, Phanishree Puramshetty said.

Companies are looking at all possible means to cut costs and reducing the people on bench is just one form of it, she said.

"Earlier, IT companies used to hire anticipating projects, but this is no longer happening. IT companies now hire as and when demand emerges," strategist at research firm KRIS, Arun Kejriwal, said.

"Many IT companies are giving out no or lower bonuses this year. Recruitments are happening in the junior and mid-level management but not in the senior level," Executive Access India's Research Associate Vansh Vardhan Joshi said.

The current slowdown in hiring is likely to continue for another six months, according to Joshi.

While the recruitments have been reduced across all levels, it is the senior level management, which is suffering the most, he said.

With slowdown in the US likely to continue for some more time, the trend of decline in hiring is also expected to continue, says a recruitment firm.

Employees are also realising that it is not conducive to their growth to keep changing jobs and this is in fact leading to more stability in the industry, believes Kejriwal.

 

INDIAN IT-BPO HEADS FOR SLOWDOWN

New Delhi
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The Indian IT-BPO industry is headed for a slowdown in growth this year but is on track to achieve its target of exports worth $60-billion by 2010, industry association Nasscom said on Friday.

“There will be some slowdown but growth will happen. The $60-billion target will be maintained and achieved,” said Nasscom president Som Mittal. Mittal said that the Indian IT-BPO industry needs to grow at 22-23% in future to achieve the $60-billion export target, a rate which could be achieved and exceeded easily.

“There will be 4-6 months of sluggish growth but we don’t think there is any long, deep recession setting in,” said the association’s new chairman Ganesh Natarajan. The Zensar Technologies CEO added that in some cases, slowdown has already led to more outsourcing.

Nasscom vice-chairman and Genpact CEO Pramod Bhasin said there was still lack of clarity over the impact of the slowdown in the US. “The impact will be clearer in the next 3-6 months,” he said.

Nasscom estimates published in its Strategic Review 2008 pegged Indian IT-BPO industry’s revenue growth in fiscal 2007-08 at 33%, exports at over $40-billion and domestic revenue at over $23-billion. The association would release the final figures for FY’08 in June.

With elections in the US, the issue of job losses due to outsourcing has raised its head again. Natarajan said Nasscom is trying to deal with the issue. “We are getting our point of view across by presenting data to prove our case,” he said.

The association laid out its six-point agenda for fiscal 2008-09 on Friday. The agenda includes focus on innovation, building communities for sharing best practices, collaboration, green IT, societal development and education & skill building. Nasscom also announced the appointment of Raju Bhatnagar as vice-president.

He will focus on the BPO sector. The association said it will also put in place initiatives to address infrastructure and security issues.

 

PHARMA PRODUCTION IN ANDHRA LIKELY TO GROW 15 PERCENT

Chennai, Hyderabad, April 15, 2008
Business Standard  The Financial Express  The Hindu Business Line  

The pharmaceutical sector in Andhra Pradesh is likely to see a better performance during the period April 2008-September 2008, with the industry demand expected to increase by 15-20 percent and production 10-15 percent.

CII's industry monitor survey, which was carried in Andhra Pradesh, Karnataka, Kerala, Puducherry and Tamil Nadu, with an objective of analysing the performance of top five sectors in each of these states during October-March of the financial year 2007-08, captured the views of senior executives of leading companies.

The top five sectors surveyed in Andhra Pradesh, which were identified on the basis of their contribution to the state gross domestic product (SGDP), were agro, manufacturing, pharmaceuticals, IT and textile industry.

According to the survey, the revenue and overseas billing of the IT sector shot up by 10-15 percent and 15-20 percent respectively. Despite the plummeting pricing to 10-15 percent, profit margins were up 5 percent. The employment levels too increased by as much as 40 percent.

The industry predicts a 5 percent growth in the IT industrial demand, with a growth in the order book position of 10-15 percent, resulting in a 5-10 percent increase in revenues. The overseas billing is also projected to increase by 15 percent. Despite an expected decline in price to 5 percent, the IT industry is likely to register a 5 percent growth in profit margins.

 

WIPRO MAY FILL PAUL'S CHAIR

Thimmaya & Mitu Jayashankar, Bangalore, April 15, 2008
The Economic Times

Is Wipro, India’s third-largest IT services company, planning a top-level management rejig? For the past few days, Bangalore’s IT circles have been abuzz with the news that Wipro chairman and MD Azim H Premji has chosen a new vice-chairman, a position that’s been lying vacant ever since Vivek Paul quit the company in 2005. Sources within the company and outside said that Suresh Vaswani, president, global IT service lines, Wipro Technologies and Wipro Infotech, may be among those being considered for this position in the $4-billion soaps-to-software behemoth.
Wipro said it would not comment on market speculation. Unofficially, several in the top rung denied any such move, but speculation in the industry continues. Close associates of Vaswani said the story has been doing the rounds inside the company for two weeks and added: “All kinds of permutations and combinations are being discussed.” According to another stream of speculation, Premji might decide on having two vice-chairmen in order to accommodate senior members in the top management.

After Paul’s exit, Wipro did not appoint another vice-chairman. Instead, the company created a structure where several strategic business units with independent heads reported directly to Premji. This helped the company grow its revenues from $2 billion to $4 billion. Wipro also appointed AL Rao as the chief operating officer in 2005.

Rao, who turns 60 this year, is expected to retire soon. Wipro Technologies, which contributes 74 percent to the company’s revenue, has five business heads — Suresh Vaswani (47), Girish Paranjpe (49, president, finance solutions), Sudip Banerjee (47, president, enterprise solutions), PR Chandrasekar (president, Americas and Europe) and Sudip Nandy (49, CEO, telecom and product engineering solutions). Some of these executives have been with Wipro for at least two decades.

Given the fact that Wipro’s growth has continued apace, a rejig of the top management appears out of place, according to analysts. Unless, of course, the dynamics of the business changes in the face of slowdown in the US economy that is expected to affect the Indian IT growth story. In the past, there has been a lot of discussion on who will succeed the 61-year-old Premji, who owns 79.5 percent of Wipro. Recently, when Rishad Premji, the chairman’s older son was inducted into the company, the media had anointed him as heir apparent.

Wipro had gone to great lengths to clarify that Rishad, who works with Paranjpe, would not take over from Premji any time soon. “Rishad is not Premji’s successor or his successor's successor. You will know this when Wipro announces its succession plan,” a senior Wipro official had said last year. Top executives within Wipro have often stated that the company very clearly wants to distinguish between ownership and professional management. The company will announce its results for the quarter on April 18, 2008.

 

HOUSEHOLD SEGMENT PUSHES PC SALES UP 26% IN Q3

New Delhi
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Led by buoyancy in household consumption and a whopping 158 percent rise in laptop sales, the total personal computer (PC) sales (desktops and notebooks combined) surged 26 percent year-on-year, to touch 1.75 million units in the third quarter ended December, 2007.

“The third quarter was driven by increased consumption in the household segment while industry verticals and corporate sectors such as telecom, banking and financial services, manufacturing, e-governance and IT-enabled services, experienced steady growth. The growth in these verticals is expected to continue in the fourth quarter,” the Quarterly Industry Performance Review released by hardware association MAIT said today.

Apart from the traditional sectors, consumption was also witnessed in small and medium enterprises (SMEs), education, retail and other computer-centric small enterprises. Aggressive pricing by PC vendors has also helped improve the penetration, especially in the households and the SME segments.

With this, the cumulative PC sales for the first three quarters of the fiscal stood at 5.04 million units and are expected touch 7.25 million units at the close of the fiscal.

During October-December, the desktop market grossed 1.25 million units, up four percent over the same period previous year. However, sales were seven percent lower than the sales in the second quarter of the fiscal (sequentially). “Sales are expected to be steady in the quarter January-March as IT sales peak in the last quarter of the financial year,” it said.

As per the MAIT-IMRB study, the assembled desktops – the smaller lesser known regional brands and unbranded systems, accounted for 32 percent of the PC sales in the third quarter, while the proportion of the branded desktops was 68 percent. MNC brands accounted for 51 percent of the market while the Indian brands accounted for the rest 17 percent.

Notebook sales crossed 5 lakh units, recording 158 percent growth over the third quarter in 2006-07. The high growth in notebook consumption can be attributed to the drop in notebook prices and the additional benefit of mobility and space management.

Notebooks are increasingly finding their way into the homes, SMEs and the education sector. Several first-time PC buyers are now opting for notebooks rather than desktop. High consumption in corporates, IT companies, financial institutes and the government, however, continues to drive the notebook consumption, it added.

 

GANESH NATARAJAN IS NEW NASSCOM CHAIRMAN

New Delhi
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Software association Nasscom today announced the appointment of Dr Ganesh Natarajan, Deputy Chairman & Managing Director of Zensar, as its new Chairman for the financial year 2008-09, while Pramod Bhasin, President and CEO of Genpact has been elected as the new Vice-Chairman.

The appointment comes at a critical time when the Indian IT/BPO industry is facing multiple uncertainties including fears of an imminent slowdown in the US, and the looming sunset clause for the STPI scheme. “We will focus on giving every segment a reason to succeed and grow. Whether is it the STPI issue or the US market growth, we will work with all segments. Also, these are not long term issues.

“Our priority is to make sure that all the stakeholders are aware of the challenges. In addition, domestic market will be a focus area,” Dr Natarajan told Business Line.

Asked if the industry anticipated a slowdown, he said, “There may be some slowdown in customer spending, but that will be in the short term. We will have to be cautious about the indiscriminate costs.” Dr Natarajan takes over from Lakshmi Narayanan, Vice-Chairman, board of directors, Cognizant Technology Solutions, who was Nasscom chairman for the year 2007-08.

“It is an honour to be elected as the Vice-Chairman of Nasscom at the time when the IT-BPO industry is entering its next growth phase.

“As a part of the Nasscom leadership team, I will be focusing on leading the Indian BPO and IT industry globally and focusing on key initiatives such as education and security that are crucial for growth of the industry in the years to come,” Bhasin said in a statement. Bhasin has been leading Nasscom BPO Forum.

 

PMO SEEKS TAX SOP FOR IT COS IN INDUSTRIAL PARKS

Deepshikha Sikarwar, New Delhi, April 7, 2008
The Economic Times

IT companies, which have been lamenting the government’s reluctance to extend the popular Software Technology Parks of India (STPI) scheme, have something to cheer about. They can continue to enjoy the tax holiday under the industrial parks scheme. The Prime Minister’s Office (PMO) has asked the Union finance ministry to extend the industrial park scheme — which offers a 10-year tax holiday — to the IT sector.

The finance ministry — which had extended the industrial park scheme till March 2009 — had excluded the IT sector from the facility. North Block had virtually taken over the scheme from the Department of Industrial Policy and Promotion (DIPP).

The PMO’s missive comes after both the IT ministry and DIPP petitioned against the finance ministry’s move to exclude the IT sector from the scheme. This means that units — including IT, if the change happens — set up before March 2009 will enjoy a 10-year tax holiday. Thus, a unit set up in April 2008 will enjoy a tax break till 2018.

The PMO has also asked North Block to reduce the minimum area criterion. The finance ministry had prescribed the minimum area of 50,000 sq mt to encourage large manufacturing hubs, when they extended the scheme. The scheme, in its original form, did not prescribe any minimum area condition. Now, the PMO wants this to be diluted.

A revised notification is expected now and the minimum area could be reduced to 14,000 sq mt to enable IT companies to fit in. The finance ministry had raised the industrial use area to 90% from earlier 66%.

No one industrial unit can occupy more than 25% of the land in a park, bringing it down from 50%. However, these two conditions may be kept untouched in the revised notification, which is expected to come out shortly, a government official told ET.