Though the software industry will post robust growth in the new millennium and continue to provide good returns to the share-holders, there are many new entrants whose aim is just to capitalise this opportunity for short-term gains, they say.

"While it is difficult to generalise on reputations, some companies have larger capital base and funds for shifting into new areas like web-based solutions, while others having lower financial muscle may fail and quit the scene," says P Krishnan of Carlson Investment Management (Far East).

With Y2K (millennium bug) business coming to an end, the companies will have to move to electronic-commerce or internet solutions, which could prove a difficult task for firms having a low level of investments, he says.

Though Indian companies are healthyenough to face any challenge from other countries, one needs to view some of the newer companies that have sprung up with a little scepticism, feels Sukumar, fund manager at the Kothari Pioneer Asset Management Company.

For achieving sustained growth, software companies have to build strong businesses and possess organisational strength to face new challenges, Sukumar says, adding those failing to do so may collapse or get merged with larger players.

Web-based solutions is the future direction that software business is bound to take and opportunities would abound there for the strong players, feels Krishna Kumar of Anush & Company here.

There are also such promising fields like Euro Financial System Solutions where Indian firms can reap a rich harvest in the coming years, Krishna Kumar says while expressing the need for tougher regulations on these firms like in the US

It is too hypothetical too talk about regulations similar to developed nations coming into force in India as even the Securities andExchange Board of India (Sebi) has given no indication in this regard so far.

However, Sukumar is of the view that several software companies had adopted world class accounting standards besides bringing in more transparency in their books after witnessing the success of Infosys Technologies.

"It is discipline and management practices that would ensure sustained growth and good profit margins in the future," he said.