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Open Economies - Article in this morning's New York Times: India Success in Software Is Set Back by War Talk

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Article in this morning's New York Times: India Success in Software Is Set Back by War Talk

  • To: openeconomies(at)cyber.law.harvard.edu
  • Subject: Article in this morning's New York Times: India Success in Software Is Set Back by War Talk
  • From: "Moore, James" <jmoore(at)geopartners.com>
  • Date: Thu, 6 Jun 2002 08:52:42 -0400 
In this morning's New York Times, World Business Section, page 1:

For the full article, go today (while access to the article is free) to 
http://www.nytimes.com/2002/06/06/technology/06BANG.html

India Success in Software Is Set Back by War Talk
By SARITHA RAI


ANGALORE, India, June 5 - The tensions and war fears mounting in South Asia
are taking a toll on one of India's major economic success stories, its
software industry.

New business is drying up because foreign clients - mainly Americans - are
avoiding travel to the region. And though India's main technology center
here is more than 1,000 miles from the frontier with Pakistan, leading
companies are nonetheless bracing for the impact of war and are rushing to
make sure disaster recovery plans are in place.

"The last time India went to war was with Pakistan in 1971, when India was a
closed economy," said N. R. Narayana Murthy, chairman of Infosys
Technologies, India's largest publicly traded software exporter. "Today we
are a globalized economy, and prolonged talk of war is not going to help
business at all."

Neither side in the current crisis seems to want war, especially a war that
might involve use of nuclear weapons, and there has been some retreat by
each side from its most aggressive postures. But until a diplomatic formula
can be found for substantially relaxing the tensions with Pakistan, India is
likely to be seen by the world as a high-risk place to do business, a
perception many here hope will prove only temporary.

In the meantime, software service companies are doing their best to reassure
clients. "We are showing our customers our disaster recovery plans, complete
with hot-site backup centers and higher levels of security, to contend with
threats of terrorist attacks," said Phaneesh Murthy, Infosys's global chief
of sales and marketing, who is based at the company's American offices in
Santa Clara Calif. Phaneesh Murthy and N. R. Murthy are not related.

Visits from foreign clients are vital to the Indian software industry, which
must sell itself against the more familiar names of rivals in the developed
world. Customers travel here in teams to tour the gleaming suburban office
campuses, meet with executives and engineers, sit in on presentations and
see for themselves what the industry can do, compiling short lists and
learning what differentiates one Indian software company from another.

In normal times, a dozen or more customer teams might be visiting Infosys's
sprawling 50-acre headquarters in the Bangalore suburbs. But in recent
weeks, they have all but disappeared.

Phaneesh Murthy said he did not think the deferred client visits would
permanently harm Infosys's business. "We are convinced that the strategic
reason why companies outsource work to India will remain and that will
continue to bring in business," he said.

But the picture may change. "If the standoff does continue for long, it
could begin to affect business," said Kiran Karnik, president of the
industry's main trade group, the National Association of Software and
Service Companies, known as Nasscom, in a statement on Tuesday.


Dr. James F. Moore
Senior Fellow
Harvard Law School
Director, Open Economies
Berkman Center for Internet and Society
Pound Hall 511
1563 Massachusetts Avenue
Cambridge, MA 02138
 
www.openeconomies.org
jmoore@cyber.law.harvard.edu
 
Chairman
GeoPartners Ventures
214 Lincoln Street
Allston, MA 02134
 
www.geopartners.com
jmoore@geopartners.com
 
 
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