A day after Kiran Karnik, president of National Association of Software and Service Companies expressed fears of margin pressures on Indian software services sector due to competition from global IT majors, Nasscom chairman Som Mittal declared that volume growth in outsourcing would check the impact of the rising rupee on software exports.

"Though the dramatic appreciation of the rupee over the year was a cause for concern, such a development will only make the software sector to step-up productivity, cut costs and consolidate its position in the global IT market, Mittal told rediff.com in Bangalore on Saturday.

Expressing optimism over the software industry's export prospects during the current fiscal year (2003-04), Mittal said the trends indicated that the growth rate would continue to be in the high 20s to post better revenues than the last fiscal when the sector registered around 25-26 per cent growth despite global downturn and a weakening dollar.

"Volumes will continue to grow in spite of pricing pressures, rising rupee, and competition from global players as India is still the best bet for outsourcing IT services and products on account of high-tech skills and cost-effective delivery schedules," Mittal stated.

With no let-up in global economic situation and IT spending yet, customers the world over are realising that the issue is no longer why India but how and when as cost-cutting and increased productivity were forcing them to outsource their requirements from the sub-continent.

"In spite of uncertain global situation post 9/11 and the recent Iraq war, we see an upsurge in demand for Indian IT services that have extended to other IT-enabled services such as data and call centres, business outsourcing and expansion of research and development," Mittal disclosed.

While the growth will see a change due to rupee appreciation, margin pressure and competitive pricing will force companies to add advanced services to their present vanilla offerings.

"More than mere application services and software solutions, Indian IT industry is matured enough to offer chip design, product development and research expertise to move up the value chain," Mittal asserted.

Allaying fears over loss of jobs in the US and Europe due to increased outsourcing and entry of global firms such as IBM, Accenture and EDS into the Indian market for a share of the same pie, Mittal said the popular perception that Indian firms were taking away others' jobs was unfounded.

"Noises about backlash and shifting of operations by major US or UK firms to India for the same competitive advantage are to do more with political and social pressures than job losses at ground zero," Mittal clarified.

Instead of being reactive, the Indian IT industry should address the issue of job backlash and visa restrictions squarely by emphasising on the benefits of outsourcing and hiring the right talent pool.

"One should not forget that such noises are also being made by certain sections of people or organisaions in the US or UK in view of the upcoming elections in these countries where popular sentiment may make or mar their prospects at the hustings," Mittal affirmed.

Noise levels are also raised whenever supply chain changes as it happened earlier in the case of manufacturing and products. These are being heard now as outsourcing of services are getting more globalised.

Incidentally, Nasscom has hired Hill & Norton PR agency in the US to remove misconceptions about the Indian software sector taking away local jobs or wooing customers to either shift their operations outside or outsourcing more from India.

"In fact, the experience of IBM, Sun, Microsoft, HP, Intel, Oracle, and a host of other US or UK firms show that they have benefited by operating out of India with offshore development centres and service offerings to their global customers, resulting in cost cutting, higher productivity, and improved efficiencies," Mittal claimed.