IT firms eye $1-bil­lion op­por­tu­nity

Business Standard - - UNVEILED - AYAN PRAMANIK Ben­galuru, 2 June

In­dian IT firms could see busi­ness op­por­tu­nity of over $1 bil­lion in build­ing and im­ple­ment­ing solutions to help their clients be­come com­pli­ant with the GST regime.

Com­pa­nies such as In­fosys, Wipro, HCL Tech­nolo­gies, Tech Mahin­dra and oth­ers, which im­ple­ment the enterprise soft­ware of SAP, Or­a­cle, will now have to align the tech­nol­ogy back­bone based on GST norms.

The op­por­tu­nity for these com­pa­nies in­cludes cus­tomised pack­ages and soft­ware ser­vices im­ple­mented on the cus­tomer’s busi­ness.

Deal­ers or busi­nesses would need to up­load the de­tails of their trans­ac­tions and mul­ti­ple re­turns to the gov­ern­ment por­tal called GSTN and they would have to adopt tech­nol­ogy for tax­a­tion or an ERP sys­tem in or­der to be GST com­pli­ant, said Harpreet Singh, part­ner, in­di­rect tax, KPMG.

This di­rectly and in­di­rectly should cre­ate op­por­tu­ni­ties for IT ser­vices firms and other com­pa­nies that are build­ing ap­pli­ca­tion-based solutions to make tax com­pli­ance easy for busi­nesses once the GST is im­ple­mented.

“In or­der to un­der­take GST com­pli­ance, the GSTN has tied up with third par­ties called GST su­vidha providers who will be al­lowed to use the ap­pli­ca­tion pro­gramme in­ter­face for them­selves and make them avail­able for other par­ties. There are other play­ers called ap­pli­ca­tion ser­vice providers who can use these APIs to build in­no­va­tive ap­pli­ca­tions for tax­pay­ers. All IT ser­vices com­pa­nies are now gear­ing up to ei­ther be­come a GSP or ASP as they see po­ten­tial in this,” Singh added. He said any­one as­pir­ing to build and pro­vide ap­pli­ca­tion ser­vices for the GST could be­come an ASP.

Tax com­pli­ance and re­lated tech­nol­ogy ser­vice firm ClearTax es­ti­mates the op­por­tu­nity for im­ple­men­ta­tion of GST-re­lated soft­ware to be worth nearly ~1,000 crore. “For sys­tem in­te­gra­tors or ser­vice providers, the op­por­tu­nity with the GST is worth more than ~1,000 crore. In the soft­ware-led ser­vices seg­ment for the GST, we fore­see an op­por­tu­nity worth more than ~3,000 crore ($500 mil­lion),” said Ar­chit Gupta, founder and chief ex­ec­u­tive of­fi­cer, ClearTax.

Nearly 8 mil­lion busi­nesses are es­ti­mated to be reg­is­tered for the GST and the ma­jor­ity of them are likely to use ap­pli­ca­tion-based ser­vices.

“There is a huge mar­ket. Even if 60 per cent of deal­ers de­cide to go through the ASP route, we are talk­ing about roughly 5 mil­lion cus­tomers,” said Singh.

An­other IT in­dus­try an­a­lyst said some IT ser­vices providers were plan­ning to cre­ate pack­ages for GST con­sult­ing ser­vices and of­fer ded­i­cated ser­vices through BPOs.

“Apart from the in­cre­men­tal rev­enue through soft­ware im­ple­men­ta­tion, some IT ser­vices firms are talk­ing about creat­ing pack­ages for GST on the con­sult­ing busi­ness front,” said Pa­reekh Jain, se­nior vice-pres­i­dent, HfS Re­search.

The de­lay in fi­nal­i­sa­tion of the GST is, how­ever, af­fect­ing the devel­op­ment of ap­pli­ca­tions. Some com­pa­nies were strug­gling to launch their ASP solutions ow­ing to fre­quent changes in the GST law and re­lease of mul­ti­ple ver­sions, said Singh.

The de­lay in fi­nal­i­sa­tion of the GST is af­fect­ing the devel­op­ment of ap­pli­ca­tions

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