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Challenges facing Digital-isation of India

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Infosys, country's second largest software services firm, has not made any profit on government projects because of red-tapism and other issues, its co-founder N R Narayana Murthy said today.

Highlighting issues like delayed payments and changes in project requirements mid-stream, the former Infosys Chairman said government projects need to have clauses at par with international practices to ensure participation from Indian players and to make campaigns like Digital India successful.

"I know about Infosys there is not a single project Infosys has done and I believe the same story where the company has not lost money, thats a reality, when dealing with the governments," Murthy told CNBC-TV18. He added that low price, delayed payments, not accepting software on time, changing requirements mid- stream, not allocating enough time to define requirements and in some cases, corruption are some of the issues that IT firms faced while working on government projects.

"If those things are all adhered to, I have no doubt at all that the entire IT industry will rally behind the government in making Digital India a success," he said.

In the past too, Infosys has expressed concerns about working on government projects.

In India, the Bangalore-based firm works with government in areas like financial inclusiveness and access, healthcare, utilities, e-governance, and agricultural and livestock productivity. It works with various government agencies including Finance Ministry and Department of Posts.

Stating that Indian companies derive 90-98 per cent of their revenues from global corporations, Murthy said the prices are "very attractive" outside India. "Therefore, unless the government of India comes up with reasonably attractive and competitive set of clauses, I am not very sure if the large companies will be keen on working with the government," Murthy said.

Murthy said the government should have a contract that is considered fair to both the government and the companies.

For the full text of the report in the New Indian Express, click here.

In my blog captioned "Challenged Private Sector" (accessible here), I had largely confined myself to the problems faced by the private sector players in the public bus transport services sector. The problems, largely financial indiscipline, are there actually across all sectors. Having run a fair-sized business, catering to the power sector, hands-on, where things are about the worst (check here), I know it all quite from the inside. And, that's why when an overseas customer suggested shifting my manufacturing operations to his backyard, I readily accepted it (eventually, I sold it all off, choosing other business options, as I was in a fairly privileged position to do so).

Like Mr Narayana Murthy has stated, all these years, the IT sector has been insulated from it all, since "90-98 per cent of their revenues from global corporations". However, with the global economic prospects not looking too good, they are all facing growth limitations. That's where "Digital India" could make for a win-win scenario for both. From compiling and maintenance of voter lists across the country (check here), to property tax collection for city municipalities (check here), the tasks needing the engagement of professional players are huge, for overall improvement in the quality of governance in the country.

But, for that to happen, the entire "financial culture" has to change, from "payable when able, if at all" to "committed payment on time", with stiff penalties for delays. And, there again, perhaps the government has largely to get out of its present role of being a player, in addition to its key and more important role as the facilitator, regulator, and controller (where essential). Yes, essentially, I am suggesting privatisation, if not effective competition at least. For those who still have a problem with the P-word, I suggest they look up this to see if they can find a remedy there.

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