IT's reality check

For 19 years, NASSCOM's annual India Leadership Forum meetings in Mumbai were like a jamboree for the IT-BPO industry. Not this year, though.

A turbulent and uncertain Eurozone and still-recovering US have kept the industry on tenterhooks. But a timely and unexpected windfall in the form of the dollar appreciating saved the day for many IT firms. This has shored up their rupee revenues, despite the fact that their dollar revenues have either dipped or stagnated during the third quarter.

No one talks about the lavish growth rates of 25-30 per cent that were once a given norm. Forget about the big boys, the second rung firms too stayed away from media. You cannot blame them. What would they talk about? Growth rates? Expansion? Investments? Or aggressive hiring plans?

You cannot have very big growth rates over a large base. It might be possible in the early stages, but in the long run and on a higher base, you can only expect respectable growth rates, argues Rajendra S Pawar, Chairman of NASSCOM.

The compounded annual growth rate (CAGR) for the next eight years (2012-2020) has been pegged at 13 per cent, compared to 17 per cent in the last five years. The industry hopes to close the year at a 16.3 per cent growth rate and achieve $101 billion in revenues.

Thinking small

The industry, which has been synonymous with 10 or 20 companies, now realises that the onus of achieving the next $100 billion is on smaller companies that have begun to sprout across major cities.

Pawar, Som Mittal, President of NASSCOM, Kris Gopalakrishnan, Chairman of Infosys and several other leaders have argued this case over the course of the three-day deliberations.

However, when eWorld spoke to the founder of a start-up, he begged to differ. “Perhaps, they may be right. They are witness to the birth and growth of the IT industry in the country. But I have a different take on this. It can be very frustrating for a small company,” he said.

“They (the big firms) are not leaving us even small jobs that are worth just a few crores. They have everything - fat balance sheets, a powerful image and resources. How can we ever dream of getting a project like theirs?” he wondered.

Gopalakrishnan, however, remains optimistic. When asked who he thought was going to contribute to the next $100 billion, he said apart from the big, medium and small companies, even companies that are yet to be born could sprout up and play a significant role.

Jobless growth

Shantanu Paul, Chief Executive Officer of TalentSprint, a finishing school for IT-BPO job aspirants, says jobless growth could prove to be a dampener for jobseekers. “Jobs are not growing in proportion to the growth in revenues. This is one of the reasons for NASSCOM forecasting lesser jobs this year,” he points out.

Compared to the 2.30 lakh jobs generated in 2011-12, the industry predicts that only 2 lakh jobs will be created in 2012-13.

Not denying the impact of slowdown for this, Pawar, however, observes that the Indian IT-BPO industry has matured and has begun to rope in high-quality human resources by acquiring companies abroad.

“That was why we chose the subject ‘the era of hyper specialisation' as the theme of the conference this time,” Pawar asserts.

Shantanu Ghosh, Senior Vice-President (Global Solutions, Transitions and Practice Leader), Genpact, agrees. It is time for firms to look at offering better value proposition, he asserts.

Ghosh, who heads a 500-member team at Genpact, says not many companies invest in devising methods to improve value for clients.

The business process management company, with over 55,000 employees has begun to offer ‘smart enterprise processes' to clients. “Some models are evolving where IT companies can even seek a share of gains that their clients make in terms of cost savings,” he says.

Bright sparks

The fear about the unknown was latent during three day Forum, even as the who's who of the industry, analysts and customers talked about future associations and interactions. There were, however, some people who refused to be deterred by headwinds.

Pranav Mistry, the new kid on the block, is one of them. The inventor of SixthSense, a wearable gestural interface, wowed the gathering as he shared his vision of a magical real world where virtual solutions marry the physical world.

The young, unassuming MIT research assistant made the crowd believe that they did not worry about the future. Listen to him speak once and you will be convinced that IT is indispensible.

The three-day event, which has emerged as a key global rendezvous for IT-BPO industry, ended with industry leaders convinced that there is enough headroom to grow at a compounded annual growth rate of 13 per cent to achieve the next billion dollars and to reach $225 billion by 2025.

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