Even as war clouds gather momentum over Iraq, the Indian IT industry is not unduly concerned this time as it was at the height of the US-led attack in Afghanistan over a year ago.

But should the Iraq war break out and prolong for weeks or months, Indian IT firms like the Bangalore-based Wipro fears that such a development could have a cascading impact on the global IT industry, especially in the US.

The US-based Wipro vice-chairman and CEO Vivek Paul hinted in Bangalore on Tuesday night that a prolonged war in Iraq may lead the IT business downside later this year.

"Though we do not foresee immediate impact on our business should a war break out in Iraq and gets over quickly, the same may not hold good if the war prolongs beyond a point of time. It could affect the business sentiment," Paul declared on the sidelines of a two-day Tech Forum 2003, being held in the Wipro campus.

Paul, however, hastened to clarify that unlike last time when the US waged war in

Afghanistan and issued travel advisory to its citizens against flying into the sub-continent, Wipro customers in the US and Europe have not so far raised the issue of a possible fallout of an impending war in Iraq on IT operations or hinted about holding back tech spending.

"At the height of the Afghan war, we used to get as many as 50 queries about its impact on our operational services. But this time, there have been hardly one or two such queries, despite an overall concern on a likely war in Iraq," Paul stated.

Asked whether the prevailing negative sentiment in the global stock/financial markets on account of the war clouds could extend to the IT industry, Paul told rediff.com that it was premature to assess as the likely impact depended on how long the war would continue.

"If you ask whether it will affect business travel to the US or out of it, that depends on many factors, including the duration of such a war.

“Global companies or IT firms haven't yet factored the fallout of a Iraq war. Their concerns are much broader and of long-term nature even as they grapple with the continued global economic slow down," Paul asserted.

In a lighter vein, Paul said fortunately, software services were not shipped through or over Iraq. "As long as we assure of no disruption in our operations in the event of a war, I think we have addressed the concerns of our US clients," he added.

Referring to the growing backlash over loss or migration of tech jobs in the US on account of increasing outsourcing of services, Paul said the reality was global firms would continue to focus on being lean and mean in their production processes and outsource their requirements for cost benefits.

"We are witnessing a repeat of what happened two decades ago when the manufacturing industry in the US began to outsource many of their products from other countries for being cost-effective and minimising overheads.

“The services' sector, especially in the IT segment has began to realise that it makes economic sense to outsource in the same way," Paul asserted.

If continued recession, technology meltdown, 9/11 and accounting scandals rocking the Wall Street have made the US authorities to sit up and suddenly notice that jobs are vanishing and outsourcing is going up, they need to plan on a long-term basis to create more technology workers, to re-engineer and scale-up their existing workforce.

"If the US Administration is ready to spend a whopping $100 billion on waging a war on

Iraq for a regime change, but announce at the same time to slash teachers' jobs in primary schools by 25 per cent because of budget cuts, how will it be able to fill the employment gaps in the new economy industry?" Paul wondered.

With the increasing integration of world economies, thanks to the WTO regime and convergence of technologies, Paul said the process of globalisation would become all-pervasive and make inroads from manufacturing and services to jobs.