The $155-billion Indian IT industry has slipped into a single-digit growth, mainly because of not being able to see the writing on the wall with the emergence of new technologies. While analysts tracking the sector have voiced concerns over this, there are some strong voices that contest these contentions. Among them is TV Mohandas Pai, former Infosys board member and chairman of Aarin Capital. “To think Indian IT companies are behind the curve is a joke,” he said, adding that “they are much closer to customers and they know what to do. It takes time to adjust.” In fact, Pai thinks IT companies are in a good position. According to him, the annual global consumption of software is $1 trillion, growing at 2-4% annually, but Indian IT services companies are growing at 6-9%. “We have become so large that growing at 15-20% is not possible.” Nasscom, the Indian IT industry’s trade body, has given an export growth guidance of 7-8% for FY18. Large companies such as TCS, Infosys and Wipro have recorded single-digit growth rates in FY17, and there is unlikely to be any dramatic change in FY18.

But Pai remains optimistic, feeling that the Indian IT industry has risen to such challenges successfully in the past – in navigating various technology changes such as distributed computing, internet, enterprise solutions and cloud. “Our expectations from Indian IT should be normal. Companies that compete in the global market every single day, to expect them not to know what is happening, how to react, is very silly. They are leading the charge and transformation, but it will take time,” Pai said. The Indian IT industry accounts for 60% of the global outsourcing and this is unlikely to change anytime soon. However, the slower growth has impacted job creation in the industry. Companies have increased employee utilisation levels and this has crimped hiring. Pai feels that despite the situation, the attrition rate for top Indian IT services companies remains at around 15%, which indicates that people are still being hired.

To meet expectations of analysts, who have come to expect high growth from Indian IT services majors, Pai suggests these companies must make more efficient use of the cash being generated and develop a model where the EPS growth would be 10-12%. The challenge in a slowing industry for Indian IT players is gaining market share, as the industry consolidates. The Trump factor is another worrying factor for the Indian IT industry. Pai, however, feels that any move to curb the movement of technology professionals would actually see more IT work being offshored to India. “The Indian outsourcing model is not for going there (read US) and staying for the long term. They want work visas, not immigration visas. The US also suffers from a shortage of technically qualified people,” Pai said.