The export-focussed Indian IT services industry is facing a wave of protectionism from the US, where unemployment rate is at a high 9.5%. More than half of Indias $60 billion IT services exports is generated in the US.
Most of the cloud infrastructure today is onshore. People are building data centres in the north western part of the US, in central and south eastern parts. Companies are generating IT investments onshore as opposed to moving offshore. In the current political environment, that is a big plus, John C McCarthy, vice-president, Forrester Research, said, speaking on the sidelines of a Nasscom summit on Remote Infrastructure Management. One attribute of Cloud strategy for clients is that it is more politically palatable, he added.
Cloud services, delivered over the Internet, is an on-demand paradigm that can disrupt the way IT services are delivered today. Cloud computing uses virtualisation technologies and can potentially make an enterprise shed all of its IT assets one day; their servers, storage, and applications can be rented as per need from cloud service providers. Indian IT players are taking baby steps in readying Cloud services.
McCarthy, however, said that over the long term, the services component of IT will increase. Lets not confuse rhetoric with actual moves. The only thing US did was raise the price of the visas. There will always be rhetoric with unemployment on a historical high, he said. IT services will grow significantly over the next five years. Budgets may stay flat, but that reduction is going to come in hardware and software. The shift will be to services, either traditional outsourcing or as a service, he said.
Nasscom president Som Mittal echoed similar thoughts saying that long-term fundamentals of the industry will remain the same even though there are short term blips. The trends are disturbing, though it might not have that much impact. All of us would like to see large powers like the US growing. When they had a downturn, all of us were impacted. I hope US makes more positive investments to create jobs and become competitive rather than take regressive actions, he said.