1. Indian IT industry may have hit slowdown mode, but big bets on digital segment mark out the sector

Indian IT industry may have hit slowdown mode, but big bets on digital segment mark out the sector

The Indian IT industry may have slowed down to single digit growth but big bets are now being placed on the digital segment, writes PP Thimmaya

Published: February 20, 2017 5:21 AM
it-industry “The digital tsunami is reshaping our industry. The priority is to re-imagine businesses and unlock new opportunities,” says C P Gurnani, chairman, Nasscom and MD & CEO, Tech Mahindra.

The $155 billion Indian information technology (IT) industry is at the crossroads with growth slowing down to single digits as it faces the challenges of macro-economic instability, changed political conditions and a structural shift in the sector. While this is not cause for alarm, given that the industry boasts of an export component of $118 billion, and cannot be expected to record high double digit growth rate given the current size, it also means that the industry has to reinvent itself to face changing market requirements. And the beginnings of this reinvention are already visible, with the sharp focus on the digital segment gaining momentum.

“The digital tsunami is reshaping our industry. The priority is to re-imagine businesses and unlock new opportunities,” says C P Gurnani, chairman, Nasscom and MD & CEO, Tech Mahindra. “The Indian IT-business process management (BPM) sector is emerging as a digital solutions partner for global corporations and we are excited to work across stakeholders—customers, start-ups, academia and others to build this exciting future.”

Even Cognizant, which recently announced its quarterly results, has outlined its digital strategy. “To stay relevant to evolving client demand, the company will aggressively scale its digital capabilities across geographies and industry segments through both organic investments, in areas such as re-skilling and new technology practices, and through acquisitions,” goes the promise. Cognizant will also be intensifying its mergers and acquisitions (M&A) efforts to expand intellectual property, industry expertise, and platform and technology capabilities, by focusing primarily on strategic tuck-in acquisitions.

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The next wave of digital transformation is expected to open up multiple areas of work for the industry and have a significant impact on existing service lines. According to Nasscom, to brace the impact, one of the most important imperatives for the industry will be to skill / reskill the talent to gear them up for the digital opportunity. The trade body also believes that it is important to build an industry-wide collaborative model and shape a learning ecosystem that is primed for the future. “While the existing service lines will be re-imagined, newer and deeper soft-skills will be needed with increased autonomy, empowerment, and data enablement of frontline teams,” it said.

Nasscom, in partnership with BCG, is working together with the industry on a two-pronged approach to enhance the skills ecosystem—skills vs ‘job-specific’ curriculum and tech enabled learning ecosystem. The skills vs job-specific curriculum will mean blended job roles of the future, with focus on skill based learning and certification. The tech-enabled learning ecosystem will be aimed at leveraging technology for building the skills that are scalable and agile, with focus on mobility and analytics to provide reach and efficiency. The initiative aims to skill/reskill 1.5-2 million people over the next four to fiveyears.

TV Mohandas Pai, chairman, Aarin Capital Partners, says that digitisation is a natural development of web based systems. “Most changes globally are led by start-ups and the big companies soon get their share. Indian IT has gone from mainframe systems to client servers to Y2K to web based systems to the ERP wave to the mobile apps, and now digitalisation over the last 20 years, with many Western competitors falling by the wayside in this transition,” he said.

Amidst all these changes in the industry with the digital segment increasingly getting stronger, the core business of IT will not decline or become irrelevant. As Pai said, the biggest innovation over the last 20 years in services, which has made major corporations more efficient and competitive, is the global delivery model which called for a sophisticated approach to software engineering on a 24/7 basis.

There is an expectation now that there could an upturn with IT spends expected to be more positive, especially on the discretionary side. This could augur well for the Indian IT industry which could get back its growth engine revving.

The competition is certainly intense and it is only going to increase further. The battle is not only just about Indian MNCs and global MNCs, competition could spring from any unknown quarter. There is a positive disruption across the entire spectrum of the technology world starting from software, hardware and services. The Indian IT industry is getting ready for this exciting journey.

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