Lethal virus has Indian technology firms on edge
Monday, 07 April 2003, 19:30 IST
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NEW DELHI: Already stressed over the potential impact of the Iraq war on India's IT industry, software makers are now feeling the ripples of a fast-spreading acute pneumonia that has hit many countries, mostly in Asia. Industry observers say the virus, which has spread fastest in Hong Kong and China and killed nearly 80 people worldwide, may deal a blow to India's high-profile tech industry as firms cancel business trips, conferences and product launches. "The real impact of the disease on the Indian IT industry can't be predicted until the scope of the epidemic is better understood," said Sunil Mehta, vice president of the National Association of Software and Service Companies (Nasscom). "So far we haven't seen any major impact on businesses of domestic software firms, but the fear is that a widening epidemic could result in delay in the decision making process," Mehta told IANS. The potentially fatal pneumonia, known as the Severe Acute Respiratory Syndrome (SARS), is threatening businesses around the globe as travel fears spread worldwide. The economic ripples of SARS are spreading globally almost as quickly as the disease. Business activities in countries like Hong Kong and China have been badly affected. The World Health Organisation Wednesday warned travellers to postpone visits to Hong Kong and China's Guangdong province due to SARS, the first time the agency has issued such a warning. Indian corporate houses have started cancelling trips to several business fairs across East and Southeast Asia, including a major one in China, in the wake of the warning. The Confederation of Indian Industry (CII), one of India's prominent industry lobby groups, has called off its participation at the Canton Fair in China's Guangdong province. "Businesses will definitely get adversely impacted as companies adopt a siege mentality and operations are hindered by an unwillingness to move about across the globe," said an analyst with the credit rating firm ICRA India. "Although the virus' overall ramifications are still difficult to grasp at this point, India's proximity to the centre of the epidemic is likely to add to the woes of the companies," the analyst added. "The business trip cancellations are sure to disrupt the decision making process for the companies that depend on face-to-face meetings to finalise deals." Industry sources said many Indian companies have started cancelling employee travel to China and Hong Kong due to health risks. India's cost-effective software army caters to a wide customer range, including global financial giants and telecom equipment makers. This has helped the industry to log a 29 percent growth in software exports to $7.5 billion in the fiscal year ended March 2002 over the previous year. This compares with just $1 billion worth of software exports during 1996-97. Fears of a fallout of SARS on the export-oriented Indian IT industry comes close on the heels of uncertainties thrown up by the U.S.-led war in Iraq that entered its 17th day Saturday. Analysts expect India's blue-chip software makers to issue cautious earnings outlooks for the April-June quarter as a result of the war in Iraq. A marketing official of a New Delhi-based software solutions company said videoconferencing was helping fill the gap created by cancelled business trips. "We are now relying on teleconferences and videoconferences as a substitute for business travel. But this can't be a permanent arrangement for acquiring new clients," said the official who didn't want to be named. "At the moment we are just keeping our fingers crossed and hoping that the situation would be brought under control soon."
Source: IANS
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