IT sector to grow slower at 7.7% in 2020: Nasscom

The $191-billion Indian IT industry is slated to grow slower in 2020 fiscal at 7.7 per cent compared to 8.1 per cent growth in the previous year. While the sector added 2 lakh jobs, the industry is cautiously optimistic about the future due to global macroeconomic uncertainties.

The job additions at 2 lakh have been higher compared to 1.8 lakh people added last year and comes at a time when many companies have been laying off employees.

“I think any sector growing 7+ per cent is commendable,” said Debjani Ghosh, President, Nasscom. The onus is now on reskilling and upskilling, added Keshav Murugesh, Chairman, Nasscom.

The growth for the sector continues to come from digital initiatives by clients from developed markets, coupled with higher tech spending. “For this, we are aligning our talent base in the changed scenario,” said Pravin Rao, COO, Infosys.

IT companies have been facing a double whammy of sorts. On the one hand, their old business models based on body shopping has come under stress due to the US government’s strict clampdown on visa abuses. And on the other hand, the demand for newer skills such as Artificial Intelligence, data science, cloud computing has seen a huge increase in the developed markets, for which there is a lack of skilled techies.

“In many ways, Indian companies need to show to their clients that we are capable of building an iPhone-like experience and maintain the nuts and bolts of the iPhone,” said a senior executive from an outsourcing firm. Companies spent around $1- 1.5 billion on skilling in 2020 fiscal, which is roughly 1 per cent of the total industry revenues.

So far their effort seem to be yielding results. The exports sector generated over $147 billion in revenues in FY2020, growing at 8.1 per cent from the previous year. IT services sector posted revenues of $97 billion (growth of 6.7 per cent), followed by e-commerce at $54 billion (25.6 per cent growth).

While Nasscom did not give growth projections for 2021, a survey of CEOs indicate that half of them (57 per cent) expect business performance to be similar.

Tech spending, a key metric is expected to continue, an indication that companies are getting comfortable to the new kind of outsourcing. “Trust factor between clients and outsourcing companies have improved,” said Murugesh, who is also Group CEO, WNS.

Rao added that investments made in both people and technology is poised to pay off. “The runway for growth is in place,” he said. In line with this, the industry has set an ambitious target of reaching $350 billion revenues by 2025.

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