India Tech Industry Nervous About War
Wednesday, June 5, 2002
Last updated at 10:17:28 PM PT
By S. SRINIVASAN
ASSOCIATED PRESS WRITER
BANGALORE, India -- With India and Pakistan poised on the verge of war, the leaders of India's booming high-tech sector worry that a current spate of canceled business trips will extend into a slowdown in foreign investment or sales.
U.S. companies with Indian operations, such as Hewlett-Packard, Sun and Intel, have banned nonessential travel to India or raised security alerts - or both. HP has told its 2,600 employees, mainly Indian nationals, that they can leave the country if they feel at risk.
"We are beginning to see some customers and prospects canceling their business visits to India," said Kiran Karnik, president of India's National Association of Software and Service Companies. "If the tension prolongs, it could hit business opportunities abroad for our software companies."
Fears of a nuclear conflict between India and Pakistan have escalated in recent weeks - although Wednesday brought some easing of tensions when Indian Prime Minister Atal Bihari Vajpayee called on Pakistan to jointly monitor their disputed Kashmir border.
India's powerhouse software sector - worth 370 billion rupees ($7.7 billion) in the year ending in March - has two-thirds of its customers in the United States. As tensions worsened between India and Pakistan, the State Department last week urged the 60,000 U.S. citizens in India to consider leaving.
Karnik, who did not have precise figures on cancellation of visits by prospective customers, said they had not yet led to any drop-off in new orders. However, he said that could change in the face of a drawn-out standoff.
"We only hope for an early end to this," he said.
Top Indian software firm Infosys Technologies - based in the southern city of Bangalore, India's Silicon Valley - also said some customers were calling off planned visits.
"We have not seen any material impact on our business so far, but if the situation worsens, there may be concerns," said Nandan Nilekani, Infosys' chief executive officer.
Senior officials at high-tech firms say they are making contingency plans, such as copying data and programs to enable them to operate from "mirror locations" abroad in the event of a catastrophe.
The Sept. 11 attacks - coupled with that of Dec. 13 on India's Parliament - were a wake-up call on the need for disaster planning, said Karnik. "By now, we know how to cope with such uncertainties," he said.
Hewlett-Packard Co. spokeswoman Rebeca Robboy said HP permits employee travel to India only if critical to the business, and an HP general manager must sign off on any such trips.
Intel Corp. has told its 1,200 Bangalore-based employees, mainly Indian nationals, about the State Department advisory last week, and is discouraging travel there, said Intel spokesman Chuck Mulloy.
Security at Sun Microsystems Inc.'s India operations, which employ 400, is on high alert, said spokeswoman Kelly Long, declining to discuss details.
None of the three companies said employees had been evacuated.
India's fast-growing business process outsourcing sector, which handles tasks such as salary accounting and support, is experiencing some concerns, said L.S. Ram of Crossdomain Solutions.
"If it goes on for more time, we may be driving away business opportunities in this sector," Ram said. "Some clients are already on the pause mode as far as decisions to hire Indian companies are concerned."
Like others in the industry, Ram predicted a short-term crisis would prove a mere blip, with customers moving ahead with plans to do business in India as soon as tensions ease.
However, high-tech leaders - and the Indian public - were skeptical that the current conflict would escalate into nuclear war.
U.S. investment in India is a factor behind continuing U.S. pressure on Pakistan to cool things off, said Ram.
"Both countries are playing games by talking of their nuclear strengths, but there is no real danger," said Karnik. "India and Pakistan will not want it. Neither will external powers."
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