A $200-bn opportunity in core ICT awaits India | The Financial Express

A $200-bn opportunity in core ICT awaits India

We can and should address the opportunity in core ICT which has been somewhat neglected in our race to global supremacy in services

This new reality opens up an amazing vista of opportunity for service providers in 2021 and beyond.
This new reality opens up an amazing vista of opportunity for service providers in 2021 and beyond.

By Ganesh Natarajan

In December 2019, I had predicted in this column that the Indian ICT sector would continue to soar in 2020, riding on the waves of digital transformation, deep tech startups and the new IT enabled opportunities in the electric vehicle and energy sectors. Then the Covid pandemic happened, an unprecedented economic decline followed all over the world with huge impact on India, but my brethren running India’s IT services companies and B2B tech startups have delivered to the promise. This is an industry which continues to flourish. And there are reasons why 2021 can be the first year of a truly accelerated path of achievement.

Let us first consider the environment. The unprecedented unpredictability caused by Covid depressed spending for the first quarter, but with most large European and American companies realising this was going to be a long haul and the Indian government and service providers, ably supported by Nasscom ensuring uninterrupted “work from anywhere”, the confidence in continuing to support and deliver new applications from offshore locations has only increased in the last six months. To take just two examples, business process major Hinduja Global Solutions managed to transition 40,000 employees to work from home in the US, the UK, Jamaica, the Philippines and India within two weeks. A smaller unlisted company KaarTech is steadily delivering large SAP implementations and integrations almost entirely from offshore homes. As Tech Mahindra CEO and industry veteran CP Gurnani says, companies were used to working from more than a dozen offices, now they are active from a hundred thousand offices —people’s homes!

This new reality opens up an amazing vista of opportunity for service providers in 2021 and beyond. With the earlier concerns about data and applications security having been addressed, we can see people working from hundreds of locations in India and collaborating with many global locations to deliver client software, processes and engineering solutions. And the demand is accelerating too. CLSA reports that technology spending at five large US banking and financial services firms grew over 5% in the third quarter of 2020 and the commentary by global telecom companies is upbeat with commercial 5G network launches on track for 2021 with large population coverages, including in India targeted for 2021. While digital deals may be of shorter duration, the deal pipeline for overseas services players such as Globant and EPAM as well as the large Indian incumbents are robust and will continue to grow as the post-Covid recovery plays out. The new US administration will also ease the pressure on visas and the election season rhetoric on immigration and outsourcing and the decline in US unemployment rates will help Indian firms to push consulting and offshore services at a faster clip.

One demand that we can expect to see from discerning customers, globally and in India, is for a comprehensive digital reengineering service. No longer can our large and boutique firms stay in the comfortable technology box; they have to master customer journeys in all business domains, transform business processes around digital inflection points, embrace core and edge digital tech, enable new predictive and prescriptive analytics through comprehensive data management and ensure just-in-time reskilling of resources to address needs as they emerge. With open ecosystems of large and startup players becoming the trend, there will be a place in the sun in 2021 for all innovative players. The services industry will be well on its way to a tryst with a $300-billion destiny by 2025.

However, this is not enough. We can and should address the opportunity in core ICT which has been neglected in our race to global supremacy in services. The goal should be to build a $200-billion capability in this area to supplement the $300 billion in services. Core ICT will include design and manufacture of semiconductors, optoelectronics, sensors for IoT and new classes of servers and server blades to support the large-scale 5G rollout, investments in industrial electronics to enable the autonomous, connected and electric vehicle movement and new energy management operations.

With the visionary Productivity Linked Incentives (PLI) enabling national and global players to invest big, 2021 is the time to set this industry segment on a firm footing which will not only drive a true “Atmanirbhar” movement but enable the country to move from just software to hardware along with embedded software and firmware and be a true participant in the multi-trillion-dollar global core ICT industry.

Apart from the comprehensive ICT focus, we need to accelerate our investments in Artificial Intelligence across all segments of the economy. Incremental and breakthrough innovations will be needed to enable new collaborative models for manufacturing, healthcare, telecom and agriculture through robust platforms that emulate the successful India Stack that has transformed financial services. An environment of open innovation and progressive public private partnerships will deliver $250 billion to the industry in the next financial year. After that $500 billion in ICT and the trillion dollar digital India will be within reach!

The writer is founder and chairman of 5F World and a keen investor in the digital ecosystem in India

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.

First published on: 04-01-2021 at 00:15 IST