BANGALORE, India As the war or words and perhaps deeds increases between longtime foes India and Pakistan, India's high technology sector is preparing for the worst and hoping war can be averted.
With senior U.S. officials heading to the region in an effort to diffuse tensions, Indian industry executives are hoping cooler heads will prevail in the dispute between the regional rivals. Growing tensions over Kashmir and cross-border terror raids occurred just as the industry here was emerging from the economic downturn following the Sept. 11 terror attacks in the United States.
While heated rhetorical exchanges and occasional firing along the border is not unusual, it is talk of the use of nuclear weapons that has made the industry and the general populace edgy. Added to that is the travel warning reportedly issued urging Americans in the two nations to leave. With growing pressure from the United States for Pakistan to end incursions into India across the so-called Line of Control that separates its forces from Muslim-dominated Kashmir, observers here are hoping war can be averted.
U.S. concerns about a growing India-Pakistan conflict and its impact on the anti-terror war in neighboring Afghanistan are seen here as a positive influence that offers the best hope of heading off conventional war or worse.
U.S. Secretary of Defense Donald Rumsfeld and other senior U.S. officials will be heading to the region next week. Their visit also kindled hopes after a series of bellicose statements by both Indian and Pakistani governments.
Few here want a war but are nevertheless preparing themselves to mitigate the risk one will bring. The National Association of Software and Service Companies (Nasscom), for instance, is working on a plan to lower the risk that a war will bring to India's software sector.
"We do not see any immediate impact of the tensions between India and Pakistan for the IT services industry in India," a Nasscom spokesman said. "Over the past decade, we have been able to forge strong relationships with our global customers. Thus, we believe that due to the strong brand equity that Indian companies enjoy internationally, they will be able to overcome any such temporary situations."
The official added, "Nasscom plans to work closely with the industry and government to evolve a comprehensive strategy to tackle the 'India Risk' factor that may emerge from the recent incidents."
Industry executives here are nervous about war and its economic impact. "Like any other sector, the IT industry is also not immune from the impact of the recent upsurge in tensions," said Pradip Dutta, managing director of Synopsys India. "Since this industry is closely linked with international trade and commerce, the impact is more visible globally; that is, not contained within domestic boundaries."
Wipro Ltd., one of India's top technology companies, said at least one client postponed travel to India because of the hostilities. While there has been little short-term impact on business so far, Wipro vice chairman Vivek Paul said the fluid situation was volatile.
Dutta of Synopsys said "a full-scale war will certainly have serious negative consequences as it would put a halt to the travel of foreign technical and management experts to India which are critical for the growth of Indian subsidiaries of multinational companies. Similarly, it will hurt Indian software companies also as visits from customers abroad will dry up."
Companies such as HCL Perot Systems Ltd. are already preparing business continuity and disaster recovery procedures. "Such situations are certainly not good as it can extend the sales and decision cycles for new business," said HCL Perot vice president Padmaja Krishnan.
B. Ramaswamy, president of Sonata Software Ltd., said he feared that hostilities would "heighten the risk perception about the country and result in delays in decision making about committing new business into India."
Others are more worried about the lingering effects on India's high-tech industry caused by the events of Sept. 11 and do not see a war adding to current business woes. "The effects of 9/11 are still there and anything more will be redundant," said S. Narayanan, chairman and managing director, MRO-TEK Ltd.
India's stock market has already declined in response to increased tensions and travel uncertainties. Few dispute the ability of India's high-tech industry to survive a war. But no one doubts the effects of a war with Pakistan could be even worse than the business slowdown after 9/11.
Hence, many in industry are pinning their hopes for peace on Rumsfeld's visit to the region.