In a year littered with so many disasters for so many economies of the world, the Satyam Computer episode contained the most damage potential for India. The potential was that of a domino effect on the global reputation developed by the Indian IT sector. That too at a time when it could least afford such an impact. But as the year draws to a close, the fallout from the episode seems to have been neatly contained within Hyderabad.

Instead India somewhat fortuitously made an opportunity out of adversity. Last week as the Satyam saga unfolded, the Lok Sabha passed the critical Information Technology (amendment) Bill 2006, that will correct some of the typical potshots taken at the domestic IT sector. Basically the bill gives the government the power to tackle data theft. For the anti-outsourcing lobby the possibility of data leaking from the Indian BPO companies was their strongest weapon to deny business to them. The sting operations involving Indian call centre employees were really beginning to hurt. But now the IT companies can use the umbrella provided by the bill to source business with confidence. Sure, the bill does have some debatable features like giving the government too much power to block websites in the name of national security, and they need to be revisited. But those are not germane to the issues here.

Both the developments will have an impact on the Indian IT sector but my bet is that as the days progress the deleterious impact of the Satyam saga will recede, whereas the beneficial impact of the bill will become evident.

... contd.