Optimism is back

Updated: Dec 31 2013, 17:35pm hrs
A year that started with clouds of economic uncertainty looming large over the global economies and consequently for the IT sector is ending on a note of optimism and confidence for most IT companies. 2013 has been a year of low spending and reduced budgets, particularly in areas of discretionary projects but with the US and Europe showing signs of recovery, albeit a tepid one, 2014 promises to be a year of robust growth for most companies in the sector. Double digit constant currency growth will be the norm and some of the better prepared firms with firmly entrenched customer relationships can be expected to post high teen revenue and profit growth in FY 15.

At a firm level, there are two significant opportunities that are emerging in all the key markets in the US, Europe Asia and Africa, The first is the inexorable move towards the cloud. After a slow take-off since 2010, 2013 has been an inflection point for many companies and the move towards software-as-a-service and a lot of big iron from on-premise data centres to co-located facilities and private and public clouds shows that the early concerns with data security have been overcome and firm commitments are being made to the capex to opex migration. This opens up enormous opportunities for providers to don the mantle of what Gartner calls cloud brokers and build platforms and consulting capabilities to assist clients in the process of an accelerated migration.

The second trend is digital transformation, which has the potential to be a multi-billion dollar opportunity for the services firms and more important a truly game changing agenda for chief strategy & marketing officers of all companies with a significant business to consumer interface. To paint the new scenario in simple terms, the minute one views the internet and cloud services as the new IT department of the firm and surveys the variety of access devices iPads, smartphones etc that give power in the hands of the consumer as well as the engagement points including social media that are now available, the imperative for managing a true extended enterprise where every demand chain and supply chain partner has 24x7 access to the firm will become apparent. No wonder then that the new designation of importance is the chief digital officer of the firm and chief marketing officers are demanding and getting technology wiz kids to be part of their team to turn customer access ideas into business solutions expeditiously.

For the customer organisation, an effective understanding of the nexus of forcescloud, mobility, enterprise social media and big data and analytics will enable customers and suppliers to participate interactively in product design, price discovery and instantaneous information access and for the provider organisations, the understanding of the legacy systems of the customer will put incumbent firms at an advantage if they have the business savvy and new technology skills to build a new generation of digital enterprise applications and integrate them into the IT architecture of the organisation.

At an industry level, the new digitalisation opportunity presents enormous entrepreneurial opportunities. Expect the Nasscom 10K start-up programme supported by mushrooming tech incubators to really take off in 2014 and after many years of trying, many of us will finally see a dream coming true of multiple niche software product companies becoming part of the go-to-market eco-system of the larger companies. The upcoming Nasscom India Leadership Forum will showcase many of these opportunities and bring strategy and marketing chiefs from Fortune 500 firms to discuss their expectations from IT partners in future a must attend event for every potential beneficiary of the new digital universe.

As a country, we will see 2014 as a watershed year with the election scene still unclear as both the leading political parties seek to woo all constituents including India Inc in their battle for poll supremacy. In this process, if progressive governments are able and willing to accelerate the process of e-government and the mission of technology transformation is pursued, the big domestic opportunity for the IT sector may open up as well. There is no dearth of promise in the market place and the last few quarters of moderate growth have given time for firms to strengthen their own capabilities for the challenges and opportunities that lie ahead. We all look forward to a happy new year!

Ganesh Natarajan

The writer is vice-chairman & CEO of Zensar and a member of Nasscoms Chairmens Council