Wipro Ltd.
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The $110-billion IT-BPO sector has grown without much government intervention, in the process creating 3 million direct jobs and about 10 million indirect ones. Despite slower growth in the past 4-5 years (11-14% compared with 18-22% earlier), the momentum looks set to continue.
Industry association Nasscom predicts that by 2020 the business would have tripled in size to about $300 billion and created another 1.5 million jobs. Favourable policies would be welcome in this growth phase, to boost both exports and the domestic market.
The latter contributes less than 12% of the business of companies like TCSBSE -0.82 %, Infosys, WiproBSE 1.15 % and HCL, but has the potential to emerge as a significant business opportunity. Particularly so as new geographies like the Philippines, Malaysia and China have emerged as alternatives for exports.
"It's a pity we can't tap our own market, not because of lack of business but for reasons spanning delays in awarding government contracts and in payments, and overall bureaucratic inertia," says the head of strategy of an IT services major who wished not to be named.
Besides, the higher costs of doing business in India (labour costs have more than tripled in the past 8-10 years) have eroded the labour arbitrage advantage. Even the local market that needs the benefits of technology to reach people quickly has seen tardy growth, thanks to glacial pace of government approvals and delayed payments forcing companies to exit government projects. While engineers are more expensive today, quality is a concern and companies have to invest in training — InfosysBSE 1.94 % alone spends over $150 million a year on training. Efforts towards improving quality and skilling at the college level will help companies tap ready-to-bill talent.
Says R Chandrashekhar, president, Nasscom: "The ICT [information and communications technology] sector can contribute to the development agenda of the country. For exports India needs industry-ready talent from colleges. In the local market, the pace and spread of IT implementation of the government has to change."
Typically it takes 2-3 years for the government to do project development reports and award contracts, by which time technology changes. Besides, payment delays discourage companies. Of the 31 mission-mode IT projects that the UPA government initiated, less than half got off the ground.
These include e-filing of tax returns, online passport applications amongst others. Says the strategist quoted earlier: "Over the years we reduced our exposure to government business due to unpredictable timelines and currency fluctuations. We won't restart that business in a hurry."
Adds Sandeep Ladda, technology leader, PricewaterhouseCoopers: "The domestic market, particularly the government sector, is too big to ignore. The industry needs single-window clearance and predictability in projects."
On the exports front he adds: "India has the scale but has fallen behind on competitiveness. Availability of high-skilled talent [in areas like cloud, analytics technologies] will help." That apart TJ Singh, vicepresident of research at Gartner, believes India needs to invest in automation and robotics as human labour costs will rise.
"India has the technical ability to do so. The government needs to invest in building capacity and providing trained manpower. To create a Silicon Valley-type hub it needs to push for industry-academia collaboration, besides funding R&D initiatives." While some of these initiatives will take time to show results, Akhilesh Tuteja, head of IT advisory at KPMG, says: "The government should bring clarity on tax issues. There's no clarity on how companies can offset costs arising out of overseas operations."
Nasscom has chalked out a 12-point agenda that asks the government to focus on IT in education, healthcare, agriculture, overhaul IT procurement policies and counter protectionist moves by foreign governments, among others. The new government has its task cut out to strengthen India's technology services clout globally.
Industry association Nasscom predicts that by 2020 the business would have tripled in size to about $300 billion and created another 1.5 million jobs. Favourable policies would be welcome in this growth phase, to boost both exports and the domestic market.
The latter contributes less than 12% of the business of companies like TCSBSE -0.82 %, Infosys, WiproBSE 1.15 % and HCL, but has the potential to emerge as a significant business opportunity. Particularly so as new geographies like the Philippines, Malaysia and China have emerged as alternatives for exports.
"It's a pity we can't tap our own market, not because of lack of business but for reasons spanning delays in awarding government contracts and in payments, and overall bureaucratic inertia," says the head of strategy of an IT services major who wished not to be named.
Besides, the higher costs of doing business in India (labour costs have more than tripled in the past 8-10 years) have eroded the labour arbitrage advantage. Even the local market that needs the benefits of technology to reach people quickly has seen tardy growth, thanks to glacial pace of government approvals and delayed payments forcing companies to exit government projects. While engineers are more expensive today, quality is a concern and companies have to invest in training — InfosysBSE 1.94 % alone spends over $150 million a year on training. Efforts towards improving quality and skilling at the college level will help companies tap ready-to-bill talent.
Says R Chandrashekhar, president, Nasscom: "The ICT [information and communications technology] sector can contribute to the development agenda of the country. For exports India needs industry-ready talent from colleges. In the local market, the pace and spread of IT implementation of the government has to change."
Typically it takes 2-3 years for the government to do project development reports and award contracts, by which time technology changes. Besides, payment delays discourage companies. Of the 31 mission-mode IT projects that the UPA government initiated, less than half got off the ground.
These include e-filing of tax returns, online passport applications amongst others. Says the strategist quoted earlier: "Over the years we reduced our exposure to government business due to unpredictable timelines and currency fluctuations. We won't restart that business in a hurry."
Adds Sandeep Ladda, technology leader, PricewaterhouseCoopers: "The domestic market, particularly the government sector, is too big to ignore. The industry needs single-window clearance and predictability in projects."
On the exports front he adds: "India has the scale but has fallen behind on competitiveness. Availability of high-skilled talent [in areas like cloud, analytics technologies] will help." That apart TJ Singh, vicepresident of research at Gartner, believes India needs to invest in automation and robotics as human labour costs will rise.
"India has the technical ability to do so. The government needs to invest in building capacity and providing trained manpower. To create a Silicon Valley-type hub it needs to push for industry-academia collaboration, besides funding R&D initiatives." While some of these initiatives will take time to show results, Akhilesh Tuteja, head of IT advisory at KPMG, says: "The government should bring clarity on tax issues. There's no clarity on how companies can offset costs arising out of overseas operations."
Nasscom has chalked out a 12-point agenda that asks the government to focus on IT in education, healthcare, agriculture, overhaul IT procurement policies and counter protectionist moves by foreign governments, among others. The new government has its task cut out to strengthen India's technology services clout globally.
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