‘Govt spending will help jumpstart tech economy’

Mritunjay Singh, Executive Director and President, Pune-based technology services company Persistent Systems Ltd, is bullish about India and thinks the government spending in the tech area will help “jumpstart” the economy.

In an interview to BusinessLine on the sidelines of the Momentum Jharkhand Global Investors Summit, he talked about the government’s push towards digital, Persistent Systems’ thrust on government business and the impact of current global uncertainties on Indian IT companies. Edited excerpts:

With the Centre’s push towards digital, what opportunities do Persistent see in India?

Even before the push towards digital happened, I was very bullish about India. The optics of the government has been changing for the past few years; a lot of un-cluttering of policies has happened. I think the Centre is working on easy payment norms, deregulation of payments and ensuring cash flows — this was a major challenge for the IT industry.

It will take some time though, because spending needs to match up with the procurement process. I think, in India, government spending will jumpstart the domestic economy in tech spending and transform the (tech) economy.

IT majors are backing out of government projects citing delay in payments. Why is your opinion different?

I’m an optimist and I’m looking at what will happen to the market 3-5 years from now. I’m not talking of today. But, in these 3-5 years, I am fairly confident that the market will be a lot more transparent; there will be ease of how RFPs (request for proposals) will be processed, how payments will be made.

You mentioned government spending on tech. Let us take the example of the BHIM app. Already, there are multiple private digital wallets. How does government infrastructure compete with deep-pocketed private players?

The way we look at it is that the ecosystem is evolving. We are going through a phase where the private players have a profit motive and the government is trying to create disruption where things are not moving. The digital payment scenario in India today is at a stage similar to the telecom industry’s in 1990-95. It was not at all easy to get a telephone then. Today, the payment infrastructure is going through that change.

Look at the digital band-width: as an infrastructure, that too is going through a change.

Not having a legacy is a big advantage for us. So a churn will happen. Private players will come and the government will intervene.

What importance does Persistent place on government projects?

Today, the US accounts for 85 per cent of our business, and government projects (in India) about 1 per cent. However, the share of government projects is expected to go up to 3-5 per cent in the next 3-5 years.

With global uncertainties, and 85 per cent of your business coming from the US, are you worried?

No. We are very confident about the US business. I do not see the (US) business coming down in the next five years. We have a very healthy pipeline.

Around 48 per cent of my employees are local citizens. Our on-site percentage is also very small — about 12 per cent against an industry average of 28-29 per cent.

The impact on Persistent is very minimal. The industry will have some short-term impact. I do not think it will collapse; the price will adjust to the cost.

Is it time for the IT industry to re-think its business models and polices, especially with protectionism being the new normal?

It is the time to react. The re-think should have happened two years ago. Companies will have to change their offerings, build new market, invest in the future.

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