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Challenging year ahead

B.V.R. MOHAN REDDY | Updated on: Dec 27, 2012

2012 was a challenging year for economies around the world with many of them showing decline. The challenges created by the financial crisis in Europe have shown an impact on both GDP growth and international trade growth. GDP growth is expected to be 2.1 per cent against 2.4 per cent the previous year while International Trade growth is expected to slow to 3.7 per cent against 5 per cent in 2011. While financial “doomsday” scenarios have been averted in 2012, business environment is uncertain and short-term outlook concerning. As a sector emblematic of globalization and international trade, the Indian IT industry will also see a slow down in growth. IT industry is estimating that export growth will be approximately 11 per cent, down from 16 per cent a year ago. As organisations look to optimize their profitability through this period, using outsourced and offshored resources becomes more attractive.

Companies are looking at leveraging IT to streamline operations for greater organizational effectiveness. Companies are also looking at lowering product development costs by effectively using capability and costs with Indian IT/ITES industry.

Such periods of uncertainly in the past have provided a great platform for organizations to refine strategy and execute initiates that increase competitive advantage and accelerate growth. There are three such initiatives that Indian IT companies will look at – the first is expanding the delivery capability beyond India to leverage on the global expertise that can then be supplemented with Indian cost advantage.

The second is investment in creation of intellectual property. This IP can then be leveraged to deliver innovative and non-linear solutions to clients. The third is continuing to improve the talent pool in the country that can then be leveraged to address the ever-increasing opportunities in the medium to long term.

In summary, the Indian IT industry is looking at a challenging and uncertain year ahead. However, I believe the good companies will use this as an opportunity to make the investments that will increase their competitiveness for the longer term.

(The writer is Chairman and Managing Director Infotech Enterprises Limited)

Published on December 27, 2012
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