Three thousand years of preparation
Ambassador Tayal also gave his thoughts about why India is such a strong IT country. He pointed out that India has a long history of mathematics and logic. Mathematical concepts evolved in India because of a strong emphasis on astrology and astronomy as far back as 2,500 years ago. "It is generally believed that the concept of zero evolved in India," the Ambassador said. He also mentioned India's strong tradition in logic. "If you see the ancient Indian texts, there is a lot of dialogue between the master and the disciple. They always question, and they use logic. And mathematics and software, they use logic. So it is in our genes."
Mr. Tayal also provided a brief overview of Indian IT industry trends in 2008. The Indian IT services sector has matured considerably with its expansion into different service verticals and increasing geographic penetration. India's IT sector registered a growth rate of 28% from US$37.4 billion in 2005-06 to US$47.8 billion in 2006-07. It is expected to grow to around US$55 billion in 2008-09 increasing by 22-24% over the previous year. Domestic growth of 28 to 30 percent in the industry would help support the sector, which now employs some 2 million people across India in spite of slow down in major markets.
Government participation
Since the Korean government is such an active participant in its IT sector, the Ambassador was asked if the Indian government also has specific programs to boost its own IT sector. Ambassador Tayal responded by saying: "The Government of India is committed to making India a frontrunner in the Knowledge Millennium. In pursuance of its goal, a legislative framework was put in place with enactment of the Information Technology Act 2000." The act puts forth three major policy changes. First, it allows investment of up to 100% foreign equity with full repatriation benefits. Secondly, it sets the highest possible rate of customs taxes for IT hardware to just 10%. And thirdly, the excise duty on computers and MP3/MP4/MPEG4 players has been reduced and computer parts like flash memory and combo-drives, wireless data models have been exempted from duty altogether.
India-Korea cooperation
We also spoke about the extent of Korea-India cooperation in the IT sector. The ambassador said: "India and Korea have a long understanding on cooperation in the IT and services sector." He pointed out the specific areas of IT software, IT services, e-governance, IT R&D and development of third markets as historical places where Korea and India work together. He emphasized that India is very keen to further develop computer and IT related services with Korea and that his country was interested in relaxed movement restrictions for professionals between the two countries. He said that mutual recognition agreements in professional services would also be a good program to consider.
He spoke about the visit of former President Dr. A.P.J. Abdul Kalam to South Korea in February, 2006, and his proposal to set up a World Knowledge Platform. This proposal envisions joint development of knowledge based products by combining the core competencies of the two nations. Korean strength in manufacturing, product development and marketing coupled with the competitive edge of India's software capabilities can achieve global leadership in product design, involving integration of both hardware and software, and marketing in third countries using an e-business satellite network. Providing comprehensive solutions in the emerging areas of Embedded Technology would be a profitable venture through investment in the hardware sector by the Korean companies in India.
When asked, Mr. Tayal offered several examples of current companies that are heavily engaged in both the Korean and Indian markets. These companies are Tata Consultancy Services, Nucleus Software, and Satyam.
Tata Consultancy Services Limited (TCS) is an IT services, business solutions and outsourcing organization that delivers real results to global businesses, ensuring a level of unmatchable certainty. TCS offers a consulting-led, integrated portfolio of IT and IT-enabled services delivered through its unique Global Network Delivery Model, recognized as the benchmark of excellence in software development. A part of the Tata Group, India's largest industrial conglomerate, TCS has over 116,000 of the world's best trained IT consultants in 42 countries. The company generated consolidated revenues of US$5.7 billion for its fiscal year which ended March 31, 2008 and is listed on the National Stock Exchange and Bombay Stock Exchange in India. TCS commenced its operations in South Korea in 2003, to serve local customers as well as global multinationals having operations in Korea. TCS has built excellent delivery capability in Korean language - with about two-thirds of its workforce being local. They also leverage the skills and infrastructure at the Hangzhou Global Delivery Center in China and various Global Delivery Centers in India. TCS's key offerings include IT Services, Engineering Services & Embedded systems development, TCS BaNCS solutions for Banking and Financial Services sector and IT infrastructure support. TCS serves industry verticals such as banking and financial services, insurance, manufacturing, travel and logistics, and hi-tech industries.
Nucleus Software is another company involved in both Korea and India. The company delivers software solutions to the banking and financial services industry. Nucleus Software has seven wholly owned subsidiaries in India, Singapore, the US, Japan, Australia, the Netherlands and Hong Kong and branch offices in Korea and London. The branch office in Korea was incorporated in 2005. Nucleus offers consultancy and services, creation of innovative solutions. They have a series of products in addition to the array of IT services that have been its strength from the beginning. However, their focus still remains in the banking and financial segment. Most of the well-known global players in the retail-financing segment of the industry are the users of their products.
Satyam, a prominent Indian IT company, also established its branch office in Korea in 2002. Their main business areas include customer relationship management, enterprise application integration, product lifecycle management, embedded operating system strategy consulting, and quality management services. Satyam's first outsourcing consultancy project was to LG CNS. Their other clients are Hyundai Motors, POSCO and LG Telecom. They have been also offering their services to various other Korean companies, banks and insurance companies which includes Shinhan bank, KEB, Woori bank, Dongbu Insurance, Samsung SDS, and SK C&C.
At the end of the interview, Mr. Tayal pointed out that India will not be hit very hard by the crisis in 2009, as only about 20% of India's economy is export dependant. The Indian economy is structured to meet its own internal market and is expected to grow by about 7% in spite of the global slowdown. In fact he said that it provides an opportunity to the Indian IT sector to expand its global footprint. The cross border mergers and acquisitions involving Indian IT and IT-enabled companies increased by nearly 12% in 2008 to US$3.22 billion compared with US$2.88 billion in 2007. The biggest acquisitions were CitiBank's sale of its captive BPO Unit to TCS for US$505 million in October 2008 and HCL's technology's buy out of UK Consulting Firm Axon for US$658 million. Other major acquisitions are Wipro acquiring City's Technology Services for US$127 million. The trend is expected to continue in 2009.
