"If the SARS epidemic continues for some more time, it will have a major impact on the infotech sector in India," predicts J A Chowdary, president, Portalplayer India.
The Severe Acute Respiratory Syndrome has already rocked the South-East Asian economies, with aviation and tourism sectors being hit the hardest.
A former president of Hyderabad Software Exporters' Association and ex-director of Software Technology Parks of India, Hyderabad, Chowdary says all hardware manufacturing companies -- called original design manufacturers -- are based in South-East Asia, particularly China, Hong Kong, Taiwan, South Korea and Singapore. They will suffer if the SARS menace continues.
"The IT software services in the region will also be seriously affected. This will have an impact on India and Indian IT companies."
"There is also a possibility that Indian IT professionals working in South-East Asian region may be scared and start returning to India," he observes.
Speaking to rediff.com, Chowdary explained: "People do not want to visit these countries for business deals due to the SARS scare. This will be a big setback to India for business opportunities in the IT hardware and software sectors."
Hyderabad boasts of over 1,200 IT companies, but only a few dozen are in the software export business. The software exports, including the IT-Enabled Services sector, recorded a modest increase of about 35 per cent during the financial year 2002-03, with an estimated turnover of Rs 4,000 crore (Rs 40 billion), as against Rs 2,900 crore (Rs 29 billion) in the financial year 2001-02.
Leading Indian software companies such as Satyam Computer Services, Wipro, Infosys Technologies and Tata Consultancy Services, along with some foreign companies, account for bulk of the software exports from Hyderabad.
Besides, some hardware companies such as Portalplayer, Synposis, ChipLogic and ChipEngine too have a presence in Hyderabad. However, the hardware sector accounts for a minuscule turnover.
Chowdary fears that the SARS menace will have a more lasting impact than even the September 11 terrorist attacks in the United States, because Indian IT firms have been looking to South-East Asia to diversify their businesses.
"Just when the companies thought that the worst was over, the outbreak of the SARS epidemic has shaken up the region," he said.
"Customer calls have decreased. Airline companies, who are clients of software companies, are grounding their flights. Cathay Pacific has already grounded all its flights. This does not augur well," Chowdary says.
A number of clients have cancelled their visits to India, he said. Before awarding projects to companies, the client's representatives hold thorough discussions so that the products would be custom-made.
In the absence of new projects, Indian companies too are unable to send their employees to the client firms in different nations. Even if there is a project, the employees might not be willing to enter a country affected by SARS," says Chowdary.
Hyderabad, says Chowdary, will find it difficult to post a 20 percent increase in the IT software and ITES exports in the current financial year (2003-04).
The state has fixed an ambitious target of Rs 5,000 crore (Rs 50 billion), with ITES and software exports contributing Rs 2,500 crore (Rs 25 billion) each. SARS, however, makes this target look elusive.
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