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'I see growth continuing in software services ...' - Views on News from Equitymaster
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  • Aug 29, 2000

    'I see growth continuing in software services ...'

    Dr. Rafiq Dossani is a consulting professor at the Asia/Pacific Research Center at the Stanford University, responsible for developing and directing the South Asia Initiative. His research interests include financial, technology, and energy-sector reform in India. He is currently undertaking a project on the upgrade of information technology in Indian start-ups. He serves as an advisor to SEBI in the area of venture-capital reform.

    Dr. Dossani earlier worked for the Robert Fleming Investment Banking group, first as CEO of its India operations and later as head of its San Francisco operations. He holds a B.A. in economics from St. Stephen's College, New Delhi, India; an M.B.A. from the Indian Institute of Management, Calcutta, India; and a Ph.D. in finance from Northwestern University.

    EQM: How would you place the Indian software sector on the global map? In recent years they have attained fantastic rates of growth. Do you see this sustaining and what are the areas that will drive growth in coming years?

    Dr. Dossani: Considering the value addition of software, it is already contributing as much to the bottom line as all other exports put together. It is high value added from the capital point of view and low value added per person (relative to global standards): nothing wrong with that, since the former counts from an opportunity cost viewpoint. To sustain it will require continued manpower, which should not be a problem for the next 5 years, and improved infrastructure, which will happen. I see growth continuing in software services until venture capital really takes off, say over the next 2-3 years.

    EQM: Indians in the Silicon Valley are a revered lot. In what manner are these tech gurus contributing to the development of the sector in India. What is the kind of support that you have drawn from the Indian government?

    Dr. Dossani: They are putting in lots of advice, often good; the big difference from Indians in the U.S. of the past is that they see a new India, whereas the old Indians saw a bad one; the government is more ready to listen. Some are investing such as Chandrasekhar's e4e (directly) and indirectly through venture capital funds such as Walden, Draper, Chrysalis and Infinity. Government is very responsive, witness the venture capital report of Sebi; now they are keen to get ideas on telecom.

    EQM: The PM's visit to the US, it seems, is going to be dominated by issues pertaining to the IT sector. What is your expectation from this visit?

    Dr. Dossani: Deliverables are modest; global institute of science and tech is a possible deliverable at Berkeley; at Stanford-tie dinner, announcements of India studies programs will be made; he will meet with heads of Cisco, etc who will announce continued interest in India. A program on bridging the digital divides possibly.

    EQM: The fall in the NASDAQ seems to have partially dried out the flow of venture capital money into India. What will be the fallout of such a development and how do you see the situation developing from hereon?

    Dr. Dossani: It will continue since venture capital funds in India were funding portals with no market, and that sort of easy money has dried up. But there is plenty of venture capital money here (2Q was a record) and it is going for technology development in optics, etc. Chances of India getting such money will be low until some successes come out of India (that are funded by venture capital funds).

    EQM: Development of technologies is an everyday affair and this makes it all the more difficult to determine the next winner. How do you go about assessing technologies?

    Dr. Dossani: The venture capital funds take several bets all the time and only some succeed. So, assessing tech is difficult even for the experts. But I have noticed that several very good ideas that have no ready market, example, a project to create your own web page using Word rather than html, have not been able to get finance.

    EQM: Is there any book that has had a significant influence on you?

    Dr. Dossani: Funding a revolution, published by the national research council is a great one to understand the role of government on IT.

    EQM: Who are the three people that have influenced you the most?

    Dr. Dossani: Hard to say, there are too many, so I will stick to those who have influenced my research on India: Robert Wilson of Stanford University for his clear thinking on reform structures, Clayton brown of Texas Christian university for his use of economic history in proving the role of cooperatives and Amartya Sen for his insights on development in India.



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