Indian IT industry will clock double-digit growth in FY14

The $100-billion Indian IT-ITes industry didn’t have a smooth run last year. However, the third-quarter earnings have turned out to be a surprise with top-tier firms posting healthy earnings and protecting volumes. Som Mittal, president, Nasscom, tells FE’s Debojyoti Ghosh that the turnaround is not a secular trend and FY14 will be a better year for the industry recording ?at least a double-digit? growth.

Post the third-quarter results, some early signs of green shoots were seen in the IT industry. Do you think this trend is sustainable and we will have a repeat performance in Q4?

The improved third-quarter results of the Indian IT industry reaffirm the fact that the sector has strong fundamentals and we hope that FY14 will be better than the past year. Nasscom believes that the sector, which crossed the $100-billion mark last year, will clock at least double-digit growth and maintain the same momentum in the next year as well. And factors that will lead this growth are good recovery in the US market and restructured and changed business models offered by the IT industry.

Nasscom will announce its annual revised guidance for FY14 in the second week of February. While there will be pressures on the Indian IT-BPO industry, owing to the uncertain global economic climate in its traditional market, there are a growing number of indicators pointing to a recovering economy.

Till the December quarter, it was a difficult time for the Indian IT players. What do you think has changed in Q3 that has helped companies do better?

There were various factors that played a vital role in improving the performance of the Indian IT industry in its third quarter, one of the most important being the increase in the overall spend on technology as people have moved to doing new things, creating new business models and using more innovative technology.

The industry performance for the past half-year has demonstrated the sector?s ability to innovate and deliver growth of customer businesses in challenging times. Also, new opportunities are being created for solutions on mobility, analytics, cloud and collaboration.

These, combined with the revival of the US market and emergence of new markets, are some of the factors that have enabled growth of the Indian IT industry and brought it back on track.

The net addition of employees during the October-December period witnessed a slump across IT companies. How do you see the overall hiring scene this year? Will there be more demand for niche services compared to bulk recruitment?

The Indian IT sector has always been the largest hirer in comparison to other sectors adding 2.8 million employees in the previous year. Nasscom will share the revised figures on hiring in its annual report which is due for launch on February 12, 2013 that will define the overall hiring scenario for FY13. Owing to revival in the traditional markets and emergence of new markets, the people-intensive IT industry will undertake a balanced combination of niche as well as bulk hiring.

With low visibility of future business volumes, a swelling bench has become a major concern with most of the Indian IT players. Will it be a bigger concern in FY14 or there will be some respite?

Although with the low visibility on future business volumes swelling bench has become a slight concern, the industry has found innovative methods to manage bench better.

The utilisation rates today range between 72 -74%. And hiring will continue to maintain momentum as there is some revenue visibility from customer.

According to a media report, about 30 software products firms have decided to beak away from Nasscom and form a separate association called Indian Software Product Industry Round Table, or iSpirt. Your comments.

Nasscom is a member-led association and has 1400-plus members which includes software product companies.

More than 300 software product companies are members of Nasscom and 100-plus new companies joined in this fiscal year. Nasscom has a defined focus and initiative for the software product sector and will continue to grow and contribute to build this sector.

As stated by iSpirt, their focus is to create a policy think tank on software products and not an industry association, so comments about breakaway from Nasscom are not factually correct and misrepresentation of facts.

Of the 30 stated companies and individuals mentioned in the article, most of the companies are Nasscom members and are actively engaged in different initiatives. Sharad Sharma and Bharat Goenka are still part of Nasscom?s executive council. There is no breakaway happening.