Small India firms seen vulnerable to Millenium bug

08:31 a.m. Aug 20, 1998 Eastern

 

By Narayanan Madhavan

 

NEW DELHI, Aug 20 (Reuters) - Small Indian businesses have been slow to tackle the Millennium Bug problem in computers and bigger companies must shake them awake in their own interests, leading experts said.

 

``If your supplier has a Y2K (Year 2000) problem, then you become a part of it,'' Girish Vaidya, director and head of operations, India for ANZ Grindlays Bank, told a seminar organised by the Confederation of Indian Industry (CII) on Wednesday.

 

The world is 499 days away from the Y2K problem, or the Millennium Bug, which spells potential trouble for computers which use only two digits to denote years in their programming.

 

The space-saving date references, written at a time when computer memory was costly, could wreak havoc on data or disrupt computers at the stroke of midnight at the end of 1999, when they may read ``2000'' as ``1900'' or simply ``00.''

 

Industry experts estimate expenditure linked to Y2K solutions at hundreds of billions of dollars over the next few years, and see the problem as serious enough to shake economies as firms, banks, utilities and large computer users cope with its impact.

 

Vaidya said his own bank spotted the problem as early as 1993 and ran into minor guarantee problems linked to five-year deposits that came up in 1995. He said the Y2K problem could arise even before the start of the new millennium.

 

Experts said Indian firms, believed by many to be largely risk-free because they computerised late, needed to face up to the problem as well because many personal computers shipped as late as 1997 were not Y2K-compliant.

 

Unless faulty computers or software codes are fixed or replaced, the Y2K problem could trigger a range of problems from health hazards in hospitals and shut-downs in factories to costly law-suits involving customers or investors, they said.

 

Partha Iyengar, country manager of leading global computer industry consultants Gartner Group Inc (GART.O), said his firm estimated 25 percent of companies worldwide had launched no effort to tackle their Y2K problems.

 

Eighty-six percent of these are small companies, he said.

 

Experts said senior managers of companies must allocate time and resources and plan solutions.

 

``You have to assume that all systems are guilty unless proven innocent,'' said Lalit Sawhney, head of information systems at consumer goods firm Hindustan Lever Ltd (HLL.BO)

 

``This is a business issue, not just an IT (information technology problem,'' Iyengar said.

 

Vaidya said his group, Australia and New Zealand Banking Group Ltd (ANZ.AX), had initially set apart 200 million Australian dollars ($120 million) to solve the problem, and would eventually have spent 180 million.

 

The group expected to be Y2K compliant by the end of 1998, he said.

 

Narasimhaiah Seshagiri, director-general of the Indian government's National Informatics Centre and a key policy-maker, said there were difficulties in gauging business risks associated with the Y2K problem, but it could not be ignored.

 

``I don't think science fiction novels have been written on this but I think many could be,'' he said.

 

Indian software firms, cashing in on low-cost programmers, expect to corner between $2.0-5.0 billion over the next five years of a global Y2K solutions business estimated at between $60-100 billion.

 

($1 - 1.67 Australian dollars)

 

 

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