India’s $194-billion IT-ITeS sector is at a crucial juncture where growth has slowed down compared to the last two years when digital adoption accelerated on the tailwinds of the pandemic. But investment in technology not only spurs growth but also helps cut costs during challenging times. Debjani Ghosh, president, Nasscom talks about the opportunities and challenges for the sector, in an interview with Ayushman Baruah. Excerpts:
Where is the IT sector headed towards given the macro-economic uncertainties?
With technology spending emerging as a secular trend, organisations across sectors are fast-tracking adoption of digital and cloud-based technologies to drive competitiveness and growth and this trend is here to stay. Digital adoption has taken a quantum leap at both the enterprise and industry levels. Investments in areas of cloud, cybersecurity, edge computing, quantum, AR/VR (augmented reality/virtual reality), blockchain and others will continue to see growth. Despite the short term macro-economic uncertainties and tailwinds, the longer-term technology enabled transformation story is intact. Nasscom will conduct an in-depth CEO survey in January to understand how next year looks like for Indian tech industry.
But hiring seems to have slowed down?
The hiring spree seen in FY22 will continue driven by the accelerated demand for digital talent. Technology firms will continue to look for resources with digital capabilities. Employee count as of Q1FY23 has increased by 3.3% q-o-q and was up 18.4% y-o-y based on our performance analysis of select publicly-listed technology services companies. Going forward, businesses are approaching hiring more systematically and placing emphasis on investing in re-skilling their workforce with training around specialised skills. While shortage of skilled talent continues to be a global phenomenon, India with over 1.6 million digitally skilled professional, has the lowest demand-supply gap at 21.1% (as a percentage of supply) among top tech locations such as the US, China, and the UK. What determines the competitive advantage for nations in the digital world is talent. India with its young, diverse, and digitally skilled pool of talent, is well positioned to help close the demand supply gap on skilled talent and will continue to be the prime destination for talent for businesses globally.
What is the domestic market opportunity that IT companies can tap into?
Tech consumption in India has grown manifold over the last few years substantiated by the fact that domestic tech revenue has increased 1.2x between FY19-22. This growth has been spread equally across all segments — IT services, business process management (BPM), packaged software products as well as hardware. The shift to cloud has seen a demand acceleration for application migration and hosting services, system integration, network management services, and collaboration tools. Additionally, with increasing need for digitisation, the tech SME segment have increased their push towards adoption of SaaS-based products. The depth of digital transformation initiatives is beginning to set pace as companies aim for outcome-oriented adoption of emerging technologies, which will further open the space for greater and high-value engagements for services providers in the domestic market. However, for India to see a continued growth in domestic investment, various reforms are required in government procurement who can also become potential buyers of technology services and hardware.
Where do we see the attrition rates going forward?
We have seen the attrition levels flattening in the first quarter of FY23 after almost seven quarters which also reflects a lot on the various company initiatives to ramp up fresher hiring and upskilling and re-skilling initiatives. For India to keep its lead in the digital era, organisations need to ramp up their talent strategies to build digital capabilities in smaller towns, get more women to join the work stream with hybrid work norms, revamp vocational education from ITI and polytechnics, incentivise skilling, and explore innovative learning modules through government certifications. Building a culture of lifelong learning opportunities for employees and offering them clear career progression plans helps ignite employee engagement. Having said that, employees must also focus on upskilling and reskilling, learning, and unlearning to enhance their future competitiveness in the digital era.
The processing of US visas, including for H1-B, is getting very long of late. What is Nasscom doing about it?
We deeply appreciate our government’s role in raising this critical issue recently during bilateral meetings in Washington DC. Following an assurance of a “solution in the coming months” we have seen the US Embassy take up this issue. We hope that this issue gets priority given that non-immigrant high skilled workforce in the US play a critical role in shortening the current STEM demand-supply gap in the US. We will continue to work with our government and with the US Embassy in India. As an industry, we are working in the US to help grow the next generation of talent pipeline.