Wipro czar Azim Premji on Thursday pronounced that the Indian software industry was going through a correction on account of pricing pressures, rupee appreciation, and higher productivity expectations of its customers.

Reacting to the hammering Indian tech stocks have been subjected to in the capital markets since last week, Premji told the media in Bangalore that though fundamentals were strong and the industry was poised to grow, uncertainty and global slowdown were forcing companies to operate under competitive environment.

"Indian software firms have to come to terms with the harsh realities of lower billing rates, margin pressures, and rise to the growing expectations of their clients who have become demanding due to reduced tech spending," Premji stated.

With three-figure growth rates on revenue and net income becoming a thing of past, Premji said the Indian software sector had to operate in a challenging conditions with competition coming from even global players who are setting shop in India for their outsourcing and service offerings.

"Customers are demanding value for the price they pay. We have to create that value either by rising to their expectation or by decreasing our price.

"In a competitive market, customers want higher value at lower price so that they can have the cake and eat it too," Premji declared.

Cautioning that the trend for higher value at lower price, which began in 2001, would continue to accelerate, Premji said Indian software firms have to pay more attention to their customers' requirements.

"Wipro's response is to offer its customers a wider service range and expand the client base. Such an approach will enable us to grow organically through service line expansion and acquisitions.

"Keeping this in view, we intend to increase our investment in sales and marketing and look for prudent acquisitions," Premji asserted, referring to the company's three major acquisitions made during the fiscal 2002-03 -- Spectramind for service line expansion, Global Energy Practice of the US-based AMS Inc, for providing consulting skill sets, and R&D Labs for Ericsson.

"Our success in integrating these acquisitions have given us confidence to pursue this strategy further," Premji claimed.

Asked about the negative sentiment in the markets on tech shares in spite of positive results, Premji said the reason for the meltdown is due to over expectations of the market on assumptions made by its intermediary players.

"The stock markets tend to over react on different projection models based on assumption that volume or revenue growth should lead to commensurate increase on returns, which are not possible in the current circumstances," Premji stated.