Last week, software industry body Nasscom broke a 25-year tradition of issuing guidance for the ensuing financial year. The annual guidance is expected to be issued sometime next quarter. This would coincide with the start of the next fiscal, when software majors too may get a better grip on the global outlook with a new regime at the helm in the US. It would be stating the obvious to say that the Trump administration's antipathy towards outsourcing has created quite a flutter. Over 60 per cent of the revenues of Infosys comes from North American markets, as does over 50 per cent of the revenues of TCS and Wipro. However, it would be wrong to lay the entire blame on the new regime in the US. The very global delivery model (one service being delivered using resources at multiple sites) which made these players what they are is getting obsolete. Process and systems automation is taking the place of labour-intensive jobs (and not core competency jobs) executed by Indian IT. India has been losing its cost advantage as smaller countries in the time zone such as the Philippines are competitive in BPOs. Currently, around 70 per cent of the revenues of software companies come from providing solutions to the banking, financial services and insurance sector in the US. This pie is stagnant or shrinking, for a variety of factors such as service satisfaction levels, besides intense competition from new age tech companies.

Indian IT has fallen behind in skill upgradation, being left out in new areas such as artificial intelligence, design skills and cloud computing. Indian IT should focus more on cloud, IoT, virtualisation, data analytics and cyber security. It needs to develop the requisite skills by upgrading its workforce. The opportunities created at home by the drive towards digital platforms should be explored. This could form the second wave of domestic IT expansion, after a gap of a decade or or so when core banking entered the scene. Revenues from India operations of the software majors are minuscule — less than 3 per cent for Infosys, about 6 per cent for TCS and around 9 per cent for Wipro. But there is potential to raise that to double digits in the next few years.

Digital India offers opportunities but there is little clarity on the underlying potential for corporates — such as outlook on software applications for payment apps, educational tools, healthcare solutions. The companies should seek more information. Greater deployment of IT in public services would be useful in bringing down corruption in government and widen the access of citizens. The US federal and State governments have also been clients of the Indian IT and ITeS companies for the past two decades. Many of the learnings and experiences in the US market can be offered by these companies in India — to the Union and State governments as well as the private sector.

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