Thursday, November 16, 2017

Viewpoint: What is the future of the Indian IT sector, as most of the companies are laying people off?

This is a broad question and I will start by making a broad statement: The future of the Indian IT continues to be good. However, the future also depends on the perspectives one is coming from:
  • Employers in software services industry - Indian IT has become a $140bn industry built on a simple proposition: companies in the West can cut costs by getting tedious behind-the-scenes IT work done by cheap engineers in India. This trend and maturing of Offshoring IT Services has taken over two decades and is not going to be rolled back. Indian software service firms have become so big that the pace of growth – 20-30% year-on-year, has slowed to a more reasonable 5-8%.
  • Industry trends: IT budgets of client companies are growing steadily -as per Gartner, clients are increasing spend by about 3% a year. Clients are also increasing spending on new technologies and ‘digitization.’ Service firms are trying hard to ramp up new capabilities in emerging technologies while continuing to sustain the traditional business of application development and maintenance (ADM): this was perhaps the reason for management shakeup at Infosys (Vishal Sikka being booted).
  • Elephant in the room: Captive IT centers (link). Most of the media attention has been focused on the slowdown and layoffs at software service firms. However, multinationals continue to invest and grow their own captive IT centers. Not much data on investments and evolution in this segment are being tracked and we only have anecdotal information on growth there. Much of the experienced talent at such firms comes from software service organizations
  • For employees: Recent announcements of layoffs and slowdown at Indian software services firms indicate (link) a “survival of the fittest” trend. While this may feel a bit jarring in the short term, long term prospects continue to be good. Those with current skills and experience, especially those who can continue to be hands-on technologists will see opportunities.
Note: Links are from some of my viewpoints published in Linkedin and elsewhere