'India IT firms must focus on getting U.S. govt contracts'
Tuesday, 07 October 2003, 19:30 IST
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NEW DELHI: Terming the U.S. government's IT contracts a lucrative proposition for software companies, India's premier tech industry lobby group has asked local firms to make a strong pitch to corner a larger share of the pie. "U.S. government contracts offer profitability and a stable income including options that last several years," said the National Association of Software and Service Companies (Nasscom). "Long-term client relationships (with the U.S. government) can help Indian software and services businesses gain a reliable source of income," said the association in a report made available to IANS. Quoting U.S. government's Office of Management and Budget's figures, the Nasscom report said U.S. federal agencies spent $41.3 billion in 2000 and $44.9 billion in 2002 on hardware, software, telecom, integration and professional services. A study by market research firm Input states that the U.S. government will be increasing its spending on outsourcing and electronic commerce by six to 10 percent over the next 10 years. "Indian companies successfully teaming up with U.S.-based partners for government contracts are likely to be sought by them for future business," said the Nasscom in a study on the U.S. government's IT contracts profile. "The other advantage of working with the U.S. government lies in the credibility gains a company makes when dealing with such a prestigious customer," it added. "The effort required in meeting the quality standards demanded by U.S. government agencies also add to the capability of companies and expand their skill sets." The U.S. government, including the federal, state and local governments, is stated to be the world's biggest buyer. The federal government alone, a giant customer by all accounts, is estimated to spend over $200 billion on all varieties of goods and services, including IT. The state and local governments spend an equal amount. According to the Nasscom report, while the U.S. government is a major draw in terms of IT purchase potential it is also a sector that is difficult to break into by private companies. "Despite the lucrative and transparent nature of government contracts, it takes significant up front investments in terms of time, money and effort to actually bag key projects," it said. The lobby group says the U.S. government IT contracts are covered by a number of rules and regulations and companies must read all the conditions carefully to use them for competitive advantage. "Companies hoping to make a breakthrough in the government sector need to prepare themselves for a tough battle ahead," said the report. "Even so, the advantages of dealing with the U.S. government are many and the benefits certainly make the blood, sweat and tears worthwhile." The Nasscom said the U.S. geography was and would continue to remain the largest market for India's IT products and services. Leading Fortune 1,000 companies and other organisations outsource their processes either to India-based subsidiaries or third party business process outsourcing (BPO) ventures across the country in the hope of realising major benefits. Recent trends indicate that U.S. companies, impacted by the global economic downturn and compelled to look at issues such as cost cutting, will step up outsourcing activity to India. "From mega corps to small and medium enterprises to federal, state and local governments a gamut of organisations are turning to Indian shores for the IT software, services and BPO requirements," said the lobby group.
Source: IANS
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