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BW Businessworld

The Future Of Indian IT

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At the time of writing this letter, four of India’s biggest IT services firms — TCS, Infosys, Wipro and HCL Technologies — have declared their results for the quarter. All four posted results that were better than what the analysts were expecting. More importantly, the biggest market for their services — the US — is looking up slowly, and there is a feeling that the worst may be over for Indian IT services and ITeS sectors.
This would seem like an odd time to do an issue which focuses on the question: what will drive the Indian IT industry’s growth in the next decade or so?
There are reasons for asking that question. Even before the global financial meltdown, many analysts felt that the cost advantages and the offshore delivery model perfected by Indian companies might not remain an advantage in the long run. For one, the cost arbitrage was bound to come down. More importantly, global players such as IBM, Accenture, HP and Capgemini have started their own India centres and are also aiming for the same customers. Finally, many of the customer verticals which propelled growth in the past decade — BFSI (banking and financial services) or telecom — are showing signs of slowing down.
At one point, there was a feeling in the domestic industry that the way out was to have a strong consulting service component. Unfortunately, the potential for consultancy was probably not as much as expected.
So what will drive Indian IT’s next growth surge? Senior associate editor Venkatesha Babu spoke to big players, medium-sized firms and small companies as well as dozens of analysts to get an answer. His conclusion: Indian IT needs to do several different things. At one level, it needs to change its model of operations — and move away from the old-fashioned ADM (application, development and maintenance) model that has delivered the bulk of the growth in the past. Whether the new model involves innovations such as outcome-based billing or opening near-shore centres depends on the company.
At another level, the Indian IT industry needs to focus on the new, high-growth areas — cloud services, mobility services, big data, etc. — if it plans to remain relevant in the marketplace. To understand why, read our lead story in this special issue.

(This story was published in Businessworld Issue Dated 28-01-2013)