Several Indian software firms expect their businesses to be hit in the short run because of the war on Iraq, but they do not see sales being affected in the long run, top industry body Nasscom said on Tuesday.

"The immediate impact of the war is that some companies have had to pull out employees from the Middle East," Som Mittal, the newly appointed chairman of the National Association of Software and Services Companies, told a news conference.

"We do not see it having a lasting impact unless (the war) prolongs and starts affecting the world economy."

Nasscom officials said they expected the war would be short-lived and the impact on company profits "transitory".

Mittal, who is also the president of software firm Digital GlobalSoft Ltd, did not name the firms that had asked workers to leave the Gulf. He said the sector's growth potential remained undimmed.

"At the economic level, the value-addition that we offer has not been impacted... What we are seeing is a very positive change that services we offered onsite are moving offshore."

Indian software firms, which draw from the country's vast pool of low-cost engineers, offer a clutch of services to global clients in the United States, Europe and Japan.

Nasscom said the industry was unlikely to meet its target for 30 percent revenue growth in the year to March 2003 due to the appreciation of the rupee and continued weakness in the US economy, which accounts for more than 60 per cent of Indian sales.

"Almost two-thirds of our exports are dollar-denominated," Nasscom President Kiran Karnik said. "The rupee appreciated 2.75 per cent against the dollar last (financial) year whereas it was expected to decline by more than 3.0 per cent."

"Clearly, this is going to have an effect on (software) exports."

He declined to give an estimate for software exports growth in the current year to March 2004.