Y2K bug squashed, Indians eye new horizons

WASHINGTON, JANUARY 5: A man is standing on a street corner clapping his hands for no particular reason. Why are you doing?'' a bystande...

WASHINGTON, JANUARY 5: A man is standing on a street corner clapping his hands for no particular reason. “Why are you doing?” a bystander asks him. “I’m trying to keep elephants away,” says the man. “But there are no elephants within a thousand miles!” the bystander exclaims. “See? It works!” replies the man.

That’s the gag being used to explain the intriguing Y2K conundrum. Was it a hoax? Or was it a monumental effort at damage control by magnificent preventive work? “It does not matter now,” says Adam Fier, a Washington software whiz who used the joke to explain the Y2K riddle. “The end result is there was no meltdown.” Indeed, several experts say the more than a year-long curative and preventive effort against a possible Y2K bug has had unexpected spin-offs. Companies across the world have had an across-the-board upgrade that may never have happened but for the scare. Many firms trashed their old systems. Others installed new software. “We got a new billing system thanks to the Y2Kproblem,” Carin Fischer, a DC law firm analyst said.

While companies across the world spent a fortune inoculating against a potential Y2K bug, attention now turns to who made the killing. Contrary to popular belief, India made only a small but significant pile from the crisis. Although Y2K related expenses across the world is estimated to have cost in the region of $ 500 billion, industry experts say India may have got less than two per cent of the business. This is because much of the business was parceled out within host countries (especially the US) and often in house.

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Still, India came out a winner from the crisis, though not on the scale it could have or wanted to. According to the National Association of Software and Service Companies (NASSCOM), India had nearly 130 companies that offered Y2K tools and methodologies as well as actual conversion and testing work. On its website, NASSCOM boasted that the “high standard of mathematics, engineering and logic adapted by Indian programmers offer errorfree, quick and efficient solutions to the Year 2000 Problems.”

Americans apparently bought this. One World Bank survey on software services in the United States to understand the preference of vendors in software development as well as outsourcing ranks India as the number one choice. According to one industry estimate, India earned more than $ 4 billion in software services, outsourcing last year with nearly 40 per cent coming from Y2K related activity.

More than the direct revenue, the crisis also helped propel Indian companies to the forefront of the tech world and brought in untold riches through the stock market. The Bangalore-based Infosys and Hyderabad-based Satyam, both big Y2K solutions providers, listed on the Nasdaq during the year and were rated on Monday among the 50 top performing stocks of 1999 by the Investor business daily.

Infosys, with a market cap of nearly $ 25 billion, came in at 37th; Satyam, with a market cap of $ 3 billion, came in 44th. Satyam, in fact, was the secondbest performing stock in the last quarter of 1999 with its ADR shooting up from $ 30 to $ 200 (At least four other Internet-related, Indian-owned, US-based companies figured in the top 50). Having handled Y2K contracts for companies like Boeing and Ford, Satyam is gravitating towards the information gateway. Infosys, which fathered the tech craze in India, is now something of a modern Nasdaq legend.

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But with the Y2K bug soon to be consigned to history, Indian companies are already eyeing new opportunities with the contacts they have made because the millennial crisis. Some of them have made a conscious effort not to sacrifice other areas of business development to the easy money from the Y2K contracts. Firms like Infosys and Tata Consultancy put a self-imposed 25 percent cap on Y2K-related revenues and brought it down to less than ten per cent. “Y2K has been a very good entry strategy for us and we have used it to get new customers,” Infosys’ Nandan Nilekani was quoted as saying in an industry journal.“It was a good momentum builder.”

With a targeted revenue of $ 50 billion through software exports before the end of the decade, Full Speed Ahead may well be India’s motto for the new millennium.