The year 2012 has been a largely forgettable year for the IT sector. Spooked by Nasscom’s initial projections of a 11% to 14% growth and further depressed by some of the large firms suggesting that the realty could be in single digits, the year has been a succession of fits and starts, depressing forecasts interspersed with significant deal announcements and is ending with little clarity on what 2013 really holds, both for new entrants and the established stars on the domestic and exports arena!
The reality that is staring us in the face is that it is time for a change—in industry structure, the offerings of firms and even the nature of leadership needed to take the sector forward. The poster child of the industry, IT services seems to be reaching the natural end of the first sigmoid of growth which was time and material based services, whether rendered on site at the client premises or offshore in swanky campuses in the seven IT cities. The much touted second sigmoid of growth, products and solutions which have held out the promise of providing non-linearity to industry revenues, have failed as yet to deliver on the promise while the announcement of outcome based pricing has yet to graduate beyond the hype to provide a robust wave of new growth opportunities.
A related industry segment which has held out much promise for years has been engineering services, which was once seen as the most exciting white space for incumbents as well as new players as they sought to expand their contact footprint in client organisations beyond the CIO and CFO. Offshore design, drafting and product lifecycle management services and more leading edge areas like product engineering and embedded systems have flattered to deceive as the growth of captive units as well as third party service providers spluttered in recent times. The opportunity still beckons for new services to be explored at the intersection of the shop floor and the enterprise requirement planning system, but it will need serious investments in manufacturing execution systems and niche solutions like traceability and operations management to get data