Nasscom Summit: IT Industry is digital ready

The $146 billion Indian IT industry has navigated the ever-changing world of technology with remarkable alacrity and is now gearing up for the next wave from which a lot many things digital are expected. This time, however, it might be a lot more different as the momentum will be driven not just by large Indian IT services companies like TCS, Infosys, HCL Technologies but in equal measure by the new breed of start-ups.

By PP Thimmaya

For the coming fiscal, however, the projection made by Nasscom, the Indian IT industry’s trade body, did bring the level of expectation a notch lower. The IT lobby has guided a 12-14% export growth rate for FY16 which is lower than 13-15% for FY15, attributing this lower guidance to the volatile global macro economic conditions like unstable currency market, falling oil prices and economic depression in Europe among other factors. But this has not lowered the enthusiasm levels within the industry.

TCS chief executive officer N Chandrasekaran said, “In our industry, nothing is constant as everything changes everyday. You have to be ahead of the curve in investment, in adopting those technologies and doing the right thing for customers. Some of things we do will go, but new things will come. That is a natural evolution.”

According to Nasscom, the industry is also gearing up for the new skills required in the changing world of technology. Around 5-10% of the employees are working on digital technologies, More than 50,000 employees have analytics experience and a similar number come with cloud skills. The Indian IT industry currently has a workforce of 3.5 million with an addition of 2.5 lakh employees every year.

Nasscom president R Chandrashekhar said, “The industry today has a very diverse landscape which is constantly evolving and fuelling growth for the industry. Digital also became mainstream during this year with the industry increasingly investing in digitised solutions to drive future growth.”

The biggest wave sweeping into the IT industry is the growth of start-ups. Today, there are over 3,100 startups in India with 800 of them being created every year. These new age companies are focused on areas such as Internet of Things, Big Data and analytics, augmented reality, cloud computing, 3D printing, education and healthcare among others. Nasscom’s Chandrashekhar said India is currently in fourth place in terms of number of startups and the ambition is to reach the second position after the United States. This segment has already received over $2.3 billion funding since 2010 and is being fuelled by the active presence of venture capitalists, private equity funds and incubators.

The e-commerce industry also found its mention in Nasscom’s guidance this year. The country’s 278 million Internet user base and 173 million mobile Internet user base is fuelling the growth of this segment. The e-commerce segment is expected to grow by 33% in FY15 to touch $14 billion.

Overall, the industry is expected to clock revenues of $146 billion for FY15, including e-commerce and the hardware industry. This was against the last fiscal’s number of $130 billion. Exports, which is the mainstay, are expected to reach $98.5 billion in FY15, representing a growth of 12.3% in reported currency terms. The key segments which have outperformed are engineering research and development, analytics and software testing while segments like telecom and manufacturing have grown above the industry average. Besides, there seems to be a bounce back in demand in the domestic market, with the total size of this market expected to touch $48 billion in FY15 as against $42 billion in FY14.

According to Nasscom, a stable government with a technology-focussed growth agenda will help boost technology adoption in the domestic market.

For FY16, the total IT industry size,  including hardware and e-commerce, is expected to reach $165-169 billion. Global spends on technology services is expected to remain steady in the year 2015, a projection that  is fuelling the optimism of the Indian IT industry.

The key technology themes for this year are expected to be centered around apps, analytics and Software-as-a-Service (SaaS) with the driver being user experience which is expected to fuel digital transformation. The key spend areas are expected to be cloud, mobility, smart apps, platforms, embedded software, Internet of Things, security and connectivity. The growing software products business, which is gaining global traction, is expected to touch a revenue of $6.1 billion in 2015, a growth of 6.1%. The key growth areas for this segment is the appetite of the Indian middle class to consume various digital solutions, besides enterprise software and SaaS.

Nasscom vice chairman BVR Mohan Reddy said, “The future looks very promising as the IT-BPM industry is gearing itself well to the next phase of challenges. Digitisation, disruptive  technologies and innovation will fuel growth with new opportunities in the years ahead.”