Strategy to usher in the next phase of growth in the Indian IT industry

Vol 24, No 3; Article by Narendra M Agrawal, Rajesh Pandit, and Divya Menon; September 2012

The Indian IT and ITES industry has grown tremendously since the economic reforms of the early 90s, contributing over $88 billion to the country's export revenue and creating employment for over 10 million people. While the industry has offered a spectrum of low end services like data entry and managing of legacy systems and applications, as well as high end services like business intelligence and analytics, and business-technology consulting, the growth of the industry has largely been enabled by the availability of skilled and economical manpower. In this scenario, revenue growth means proportional increase in headcount. With the industry having attained significant scale, questions are being raised on the viability of this model for future growth. Talent scarcities and the law of diminishing returns are some of the elements that are driving these discussions. Further, customers, now better educated and more knowledgeable, are demanding higher value for money. Technological advances are also mounting pressure on the current paradigm. Cloud computing is seen as a significant disruptive force to the current services model. As a result of these changes top tier Indian companies are witnessing moderation in their revenue growth.

IIMB Management Review in collaboration with Center for Software and IT Management (CSITM) invited a panel of industry leaders and academicians to discuss the strategy adopted by leading Indian IT companies to maintain the growth momentum and leverage the opportunities in the current environment.

Professor Agrawal of IIM Bangalore set the context of the discussion and discussed the prospects in the domestic market, showing how the agenda of inclusive growth creates several business opportunities. He emphasised the need for collective action from government, industry, trade associations and academia to create an environment conducive to  the growth momentum. Mr S Balasubramanya, Vice President, Tata Consultancy Services presented data to support that  IT usage has grown significantly in India, and emphasised the global business opportunities that can be tapped by Indian IT companies. He underscored the importance of continued investments in IT and illustrated the adverse impact of downtime of IT systems on the business. Mr Sean Narayanan, EVP and Chief Delivery Officer, iGate-Patni described the change in buyer behaviour since the global financial crisis of 2008, particularly the shift in buying pattern to "paying only for the desired outcome". He went on to describe how iGate Patni's strategy to integrate technology and processes to offer services in utility model is expanding the pie of the services business, resulting in significant opportunity for overall growth of the IT industry.

The impetus for growth in the IT industry will come from the increasing concern in the world over food, energy and the environment, according to Professor Rajagopalan, Head of Innovation Center at IIIT Bangalore. Building on the pervasive nature of IT and the growth of devices, we would do well to use IT solutions for eGovernance initiatives, building of micro enterprises and addressing the day-to-day needs of society, he emphasised. Mr Kishore Durg, EVP - Accenture shared insights into eight IT trends that businesses will bet on in the future, with social media in the forefront and social platforms emerging as a new source of business intelligence. Mr Ananth Vaidyanathan, SVP- HCL drew attention to the shift in consumer behaviour and consumption patterns with Gen Y coming to the forefront and the significant opportunities that would create for the IT industry. Globalisation, co-innovation and focus on the employee would be among the strategic imperatives for organisations in driving non-linear growth. While it is imperative for IT organisations to develop solutions that solve societal problems, Professor Sourav Mukherji of IIMB pointed out, the issues of affordability, accessibility and asymmetry of information could make it difficult for organisations to address societal needs effectively. He gave examples of innovative organisations that have overcome the challenges in the field.