Quick Take Feb 25

Quick Take.qxd

2/14/2008

8:30 PM

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Quick Take Is India’s information technology services industry headed for a fall? We asked... R. Sivakumar, MD, Sales and Marketing, South Asia, Intel, Srikanth Ramachandran, President and CEO,

NTrust Infotech, Ajit Pillai, Country Manager, India and Saarc, Secure Computing, Shashank Samant, President Ness North America and Head of the High Tech and Software Vertical, Sudin Apte, Country Head, Forrester Research, Kaushal Mashruwala, MD, Savvion India, Neeraj Bhargava, CEO, WNS Global Services, Pawan Gulani, Manager, Strategy, Finance, Reliance Retail, Prasad Ajinkya, Head, Solutions Delivery, eYantra India, Ankit Jain, Product Manager, Hewlett Packard India, Amod Verma, Engineer, Qualcomm

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The infrastructure support is minimal and workers imbibe no managerial capabilities.

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Pawan Gulani, Manager, Strategy, Finance, Reliance Retail

[] [] [] Yes 18%

No 73%

Maybe 9%

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The IT-services industry has always shown swiftness to change and innovate.

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Kaushal Mashruwala, Managing Director, Savvion India

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There are all the signs of a rationalisation of growth in the Indian IT industry.

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Sudin Apte, Country Head, Forrester Research

YES BECAUSE: Unlike the stockmarket bubble, which keeps popping every second week, the IT and IT services bubble has been the subject of much speculation ever since the dot-com bust of 2000. This is because of burgeoning deal sizes, despite high attrition rates, lack of any significant support from the government, lack of infrastructure to sustain growth and the lack of interest and/or capability amongst the smaller players to move up the value chain. In light of such factors, some of our respondents did believe that the IT industry is, indeed, headed for a fall. Some felt that there is no focus on IT products in the Indian market. Instead, the business orientation of most of the big players as of now is on projects, so much so that they simply base their financials on projects and their profitability.

NO BECAUSE:

Despite all the above factors working against the Indian IT and IT services industry, there are still some who make a strong case for its potential for further growth and survival. Mostly insiders from the Indian IT industry, this lobby believes that the so-called ‘IT bubble’ doesn’t even exist. So, any talk of it going bust is mere uninformed speculation. Some believe that the industry is likely to face challenges in the form of a slowdown in the US economy, employee cost and rupee appreciation. Although these factors may affect the performance of the Indian IT services industry over the next few quarters, it is not a long-term problem. Also, some felt that the industry is just maturing and one can only expect to see growth and consolidation in the industry.

MAYBE BECAUSE: The recent happenings at the IT services major Tata Consultancy

Services have evidently left the IT community shaken up. According to Sudin Apte, the India country head of Forrester Research, spending growth in the IT industry has gone down by half from about 6 per cent to less than 3 per cent over the past year. Customer satisfaction has also dropped in the recent past. Given such figures and the recent turbulence in the industry, some believe that the Indian IT sector may actually be headed for a rationalisation of growth if not a fall. Some say, the meteoric growth in the past is likely to settle down to more humble levels. So, even though the size of deals and the complexity of work done has been going up, there may be grim times ahead for the industry. 25 FEBRUARY 2008

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