The tech sector is putting recession behind and eyeing double-digit growth. There was more light than gloom at the recent Nasscom meet..

Moumita Bakshi Chatterjee

The Indian IT-BPO industry has got back its swagger, with a growth outlook to match the confident stride. The $50-billion export industry is headed for a 13-15 per cent growth in FY11 and, all of a sudden, one finds discussions on cost-cutting and optimisation replaced by talk of recovery and growing deal pipeline. Of robust hiring plans involving thousands of freshers and laterals. And of large IT deals making a comeback.

All this optimism resonated at the 18th edition of the Nasscom India Leadership Forum held in Mumbai last week.

“So much has happened in the past 17 months. The global economy was in doldrums and there was uncertainty…Clients faced all kinds of pressure. In all this, the IT sector refocused its priorities… Now the finger has moved from pause to the fast forward button,” the Nasscom President, Som Mittal, said, addressing a packed house at the annual Mumbai event.

Such is the level of bubbling enthusiasm that many IT honchos feel that the sector can crank-out 18-20 per cent growth in coming years. According to Ashank Desai, Founder of Mastek, the industry will move towards such growth rates, given its aspirations to attain $175-250 billion scale by 2020. Hiring spree

A higher growth fuelled by rising demand for IT and back office services would mean aggressive hiring. Top IT companies including Tata Consultancy Services (TCS) and Wipro are already drawing up plans to hire in large numbers. TCS would hire about 30,000 professionals on gross basis in the next fiscal, 70 per cent of them freshers. The overall hiring would be across operations — IT, BPO and infrastructure, and across capabilities — ERP, analytics and Web 2.0, et al.

Not to be outdone, Wipro, over the next two quarters, will bring on board 7,500 of its campus recruits who had passed out last year (full year targets are yet to be announced). Rival Infosys is planning to make 15,000 campus offers for fiscal 2010-11.

The story is the same for mid-tier suppliers. Pune-based Zensar is planning to recruit 1,000 professionals in the next one year, while Hexaware Technologies said it will hire 400-500 fresh engineers in 2010 (the company runs a calendar year).

Even global giants sound upbeat — Deloitte LLP recently announced that it would go for a net addition of 12,000 people in the next 30 months in India; a good chunk would be in Hyderabad, Bangalore, Mumbai and Delhi.

According to Nasscom, the overall hiring for the sector will be close to 1,50,000 professionals for fiscal 2011, almost 67 per cent higher than FY10. In the current fiscal ending March 2010, the industry is likely to add 90,000 jobs, pegging the total workforce at 2.3 million professionals.

New service lines, new business models

Emerging from the shadows of the global economic crisis, IT companies believe they now have rare opportunities ahead. For one, the domestic market is brimming with opportunities. India's spend on IT and e-governance is expected to touch about $4 billion next fiscal. For IT and e-governance, the planned expenditure for the next year is seen to be around $2 billion with a similar amount envisaged on the non-planned side. Also, State Governments and agencies will now have to compulsorily spend 2-3 per cent of their budgets on technology, said the IT Secretary, R. Chandrashekhar.

Accordingly, IT and BPO service companies, who until now generated billions of dollars from the overseas market — primarily the US and Europe — are now keen to shore up the proportion of India revenue. Infosys Technologies, for instance, is looking to increase the share of domestic market revenue from the current 3 per cent to 5 per cent in the coming years.

BPO major Genpact's India-specific business arm will hire 1,500 this year to support its expansion plans. The Business Process Management solutions company flagged off its ‘India to India' arm a year ago.

Further, the new engine to fire the next round of industry growth will be based on non-linear business models, innovation in Software as a Service (SaaS), platform-based services and BPO; on new verticals such as pharma and healthcare; and in relatively under-penetrated geographies.

“For the IT and BPO industry, the opportunity ahead is rare — it's a combination of cloud computing, mobile applications and domain specialisation. Almost 80 per cent of the new opportunity between 2010 and 2020 will come from new areas. I do not know of any other industry whose future holds such tremendous prospects,” said Pramod Bhasin, Chairman of Nasscom and CEO of Genpact.

Cautious optimism

But in spite of the positive sentiments, some feel the industry may just be going over the top with its new-found optimism. Clouds of protectionism have been building up in the US for a while. Also, there have been rumblings about the possibility of a double dip recession. Already Europe is staring at a crisis over the rising debt Greece has built up. There are apprehensions that Spain and Portugal may be the next countries to be hit.

When asked if the crisis in the Eurozone was a matter of concern from an industry standpoint, Kris Gopalakrishnan, CEO of Infosys. said, “Yes it is. We will have to wait and watch.”

According to outsourcing advisory firm TPI, the watchword for the industry should be “cautious optimism”. “We are not completely out of the woods. Hopefully some of the issues will be managed. The world has overcome shocks of country-level defaults, in the past,” Sid Pai, managing director at TPI India, said.

(With inputs from KV Kurmanath and Adith Charlie)

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(This article was published in the Business Line print edition dated February 15, 2010)
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