CHENNAI: Two of India’s largest IT firms announced their results this week and neither produced anything like cheer in the markets. TCS’ revenue growth has all but stalled and Infosys, while performing above expectations, cut revenue growth forecasts for the financial year for the second time in three months.
The double whammy has prompted many to question the sheer magnitude of the challenge facing the Indian IT sector. Others, like Andy Mukherjee in Bloomberg, have gone a step further, sounding a death knell for the sector as a whole. “... vendors wasted so much time defending their legacy business of writing code for and maintaining purpose-built enterprise applications that they failed to make a mark in the digital world,” he declared.
The industry says that these predictions are alarmist at best and sensational at worst. But do not disagree that it is in the midst of an upheaval, the likes of which it has not faced in its two decade history -- business disruption going hand in hand with geopolitical uncertainty.
The saving grace is not that all is well, but that buried opportunities in social, mobile, analytics and cloud-based technologies are more promising than the threats. CP Gurnani, Chairman of IT industry body Nasscom speaking to Express rubbished predictions of doom and gloom. “This is a time of transformation, globally. When any kind of transformation is going on you can expect unusual results,” he said, adding that he was actually impressed with the recently announced results.
Raja Lahiri of Grant Thornton, agreed that new tech is going to drastically reduce dependency on manpower led IT services. “But Indian players are also investing in new tech. ...But I am confident of robust growth and companies will bounce back,” he said. There is no one, however, who disagrees that this is a test the sector has to ace. “Organisations which have taken advantage of technological advancements have emerged as dominant players,” pointed out Harsh Vardhan, EVP, Ramco Systems.
“Firms that are able to master those tools (new technologies),” concluded Gurnani, “will be able to come out as winners.”