There are many small software units which need assistance to grow. With the industry being new and financial institutions being inexperienced to handle the financial requirements, there is widespread apprehension as how to finance this sector. This article highlights the techniques used for measurement of size of the project, cost estimation, management and financial appraisal. The risks of financing the software projects are also discussed.
The
Indian Software Industry acclaimed the world over, is one of the fastest growing
sectors of the Indian economy with a Compound Annual Growth Rate (CAGR) of 56.5%
(2000-05). The total turnover of the industry during 2005-06 was about US$29.6
bn, of which US$23.6 bn is related to exports. The software industry employs over
10.58 lakh people, of which over 3.90 lakh are employed in software exports alone.
The success of Non-Resident Indians (NRIs) in this sector—described as the
industry of the next century—is even more spectacular. India has a national
vision to be the `IT superpower' for which steps are being taken to create a world
class IT infrastructure in India, spread the use of IT in society and boost software
export upto US$60 bn by the year 2010, which will create direct employment opportunities
to 2 million people. Spurred by the vision and targets, the IT sector, and particularly
the software export, is set to sizably contribute to India's GDP and foreign exchange
earnings. The Government of India is working in close association with the IT
industry for a sound and orderly growth of this sector. The enactment of the Information
Technology Act by the Parliament is a step in this direction.
The
role of financial institutions in the development of the software sector has,
however, not been very significant, as the financial needs of this sector have
not yet been fully studied or understood. With the industry being new and financial
institutions being inexperienced to handle the financial requirements, there is
a widespread apprehension about financing this sector. But there are many small
software units, which need assistance to grow. Recently, a number of venture capital
companies have been set up in the private sector by financial institutions. Foreign
venture capitalists are also steadily coming to India to finance the innovative
ideas of Indian entrepreneurs. Technical literature now available on software
engineering highlights the risks in software development, software project planning,
and size estimation and costing, risks management, etc. Based on the literature,
an interdisciplinary approach has been developed in the present paper for evaluating
software projects. |
