India’s IT, business services market to hit $13 billion by December: IDC

Source: Business Standard, Nov 25, 2020

New Delhi: India’s IT and business services market is expected to grow 5.4 per cent annually to reach $13 billion by December this year, research firm IDC said.

The segment grew 5.3 per cent year-on-year (y-o-y) in January-June (H1) 2020 period as compared to 8.9 per cent growth in H1 2019, IDC said in a report.

Of the IT and business services market, the IT services market contributed 77.4 per cent in H1 2020, growing 5.9 per cent y-o-y as compared to 9.3 per cent growth in the year-ago period.

“IT services market will begin picking up momentum gradually from 2021 onwards and is projected to grow at a CAGR of 7.2 per cent between 2019-2024, to be valued at $13.4 billion by the end of 2024,” it said.

This reduced rate of growth in the IT services market in India is due to the COVID-19 pandemic, IDC added.

“During H1 2020, application hosting services and infrastructure hosting services continued to be higher growth markets on account of increasing adoption of cloud applications (majorly collaboration applications and video-conferencing) and cloud infrastructure,” IDC said.

Owing to increased demand for VPN licenses and requirement for higher network connectivity, network services witnessed higher adoption, it added.

“In H1 2020, the role of IT services vendors gained higher prominence, as organisations increasingly approached them to help ensure business continuity by putting in place various technologies, solutions, best practices and frameworks,” IDC India Market Analyst, IT Services, Garima Goenka said.

During these difficult times, organisations were investing higher in collaboration applications, VPN licenses, endpoint devices, cybersecurity solutions, cloud, artificial intelligence, and automation.

“Apart from just ensuring business continuity, the role of IT service providers have also been towards helping organisations to achieve a higher degree of tech resilience, adaptability…,” she said.

Goenka noted that vendors have launched AI-based applications to help the government and healthcare sectors to provide citizen services and answer COVID-19 related queries, and for organisations to ensure safe and secure return of their employees to the workplace.

“IT investments across all the major sectors such as BFSI, healthcare, telecom, IT/ITeS, government and manufacturing increased considerably to improve overall experience and maintain business continuity and resiliency,” IDC India Senior Research Manager, Enterprise Software and ICT Services, Shweta Baidya said. She added that the government also relaxed some of the stringent guidelines that provided increased flexibility with respect to work from home/anywhere policies.

Indian IT firms strengthen Cloud practice as digital adoption picks up

Source: Business Standard, Jun 17, 2020

Bengaluru: Indian IT services companies are gearing up to cash in on opportunities in the Cloud services space as the Covid-19 pandemic pushes organisations to increase the pace of digitisation across the board.

Large Indian IT firms such as Infosys, Wipro and TCS are seen strengthening their Cloud offerings by forming joint ventures with global platform providers like Amazon Web Services (AWS), Google Cloud, Microsoft Azure and IBM Cloud, and growing their team of specialists in specific cloud platforms organically. Wipro, for example, has tied up with IBM to be able to provide hybrid cloud offerings to clients.

In March, Infosys had also announced a similar partnership with IBM.

Noida-headquartered HCL Technologies has set up a dedicated business unit for Google Cloud with over 1,300 professionals. The company has plans to expand the team count to around 5,000 professionals. Companies such as TCS and Infosys are also learnt to have set up specialised cloud teams for various platforms.

“Cloud related service offerings contribute around 10-15 per cent of the revenues at tier-I IT services firms. The current pandemic is accelerating cloud migration among enterprises, opening up fresh opportunities for IT services firms,” said Pareekh Jain, an IT outsourcing advisor and founder of Pareekh Consulting. In its latest estimate, global research firm Gartner has said that even though global IT spending in 2020 is expected to decline 8 per cent, “sub segments such as public cloud services will be a bright spot in the forecast, growing 19 per cent in 2020.” It also said that cloud-based telephony, messaging and conferencing will also see high levels of spending growing around 9 and 24 per cent respectively.

H-1B move to hit Indian IT firms

Source: LiveMint.com, Jun 14, 2020

Bengaluru/New Delhi: Companies such as Tata Consultancy Services Ltd (TCS), Infosys Ltd and Wipro Ltd will have to hire more American citizens if the US proceeds to suspend new job visas, a move that would substantially erode their margins.

According to a Wall Street Journal report, the Donald Trump administration is planning to bar new H-1B visa holders from coming into the country until the ban is lifted. Visa holders already in the US are unlikely to be affected.

Indian IT firms widely use H-1B visas to transfer highly skilled workers to the US, and the country accounts for 70% of the 85,000 annual H-1B visa cap, as per immigration data. The news about the planned visa suspension comes even as H-1B visa rejection rates for Indian IT firms have risen to 24% in 2019 from just 6% in 2015.

Industry body Nasscom said on Friday, “We seek exemption for technology workers as essential workers, from any restrictions that may be imposed in a second White House Proclamation. Priorities established by Department of Homeland Security’s CISA (Cybersecurity and Infrastructure Security Agency) that designates key categories of ICT workers as essential service, should help define the types of essential workers.”

For TCS, which operates in more than 50 countries, the US is the largest market in terms of revenues. “Visa regulations will continue to change and evolve. TCS focuses on adapting and complying with those regulations,” Tata Sons chairman N. Chandrasekaran said at the company’s annual shareholders’ meeting on Thursday.

Staff costs form 60-65% of total operating costs for large IT services firms.

“Operating margin may decline 30-80 basis points for the sector in FY20 as local hires, who cost 25-30% more than H-1B counterparts, increase for onsite jobs,” rating agency Crisil said in a 2019 report.

As part of its localization efforts, Bengaluru-based Infosys hired 78% of its US senior management locally in FY20. “We are committed to strengthening local hiring practices and continuously increasing the proportion of senior management hires from the local regions,” Infosys said in its Annual Sustainability Report 2020.

Analysts said greater local hiring is the way to fill up roles if job visas are suspended.

“However, I believe this is just an election rhetoric. The US will continue to have programmes to bring in skilled workers,” said Siddharth Pai, an analyst and venture capitalist.

Prasanto K. Roy, a consultant on technology policy, said US trade bodies will strongly object to the proposal. “Shutting off H-1Bs would bring a lot of services to a halt. Projects that are affected because of lack of talent will cause a bigger local pushback in the US,” Roy said.

Software startups stare at mixed fortunes

Source: LiveMint.com, Apr 08, 2020

BENGALURU: India’s software startups are seeing rising demand for collaboration and employee productivity tracking tools, as well as data protection services, as most corporate employees work from home amid the covid-19 pandemic.

However, Indian software-as-a-service (SaaS) startups are expecting a decline in revenues as companies reduce their overall spending even as some services, such as video conferencing provider Zoom and collaboration software Slack, witness a surge in users over the past few weeks.

Vertical SaaS companies that sell to speciality sectors such as hospitality, food and travel have been hit the most, said Girish Mathrubootham, founder and chief executive of India’s most valuable SaaS firm Freshworks. Horizontal startups, which cater to companies in diversified sectors, have seen a relatively lower drop in growth so far, he said.

Mathrubootham warned that this quarter will be worse for SaaS companies.

“While SaaS businesses enjoy some advantages over other industries—they are delivered over the internet and maintained in the cloud, they are easier to deploy, manage and support—they are not immune from impact. SaaS businesses should expect to see both new and existing revenue affected in (the current quarter). As such, all companies should look to conserve cash and reassess their hiring needs and growth plans given the current uncertainty,” he added in an email.

While Saas startups face tough times ahead, there are newer channels of demand opening up.

Freshworks, for instance, is seeing increased demand for products that enable companies to serve their customers remotely like a chat and call routing services. Another SaaS firm Zoho Corp has seen an increase in usage of products that boost productivity and facilitate collaboration.

“During the current virus outbreak, we have seen a spike in those products that specifically boost employee productivity and facilitate collaboration across remote locations,” said Rajendran Dandapani, director of technology at Zoho. “We even packaged them together into an easy to use suite (Zoho Remotely) that we are offering for free until this virus threat passes away.”

In the current situation, critical business data is at risk to potential security threats, according to Milind Borate, co-founder and chief technology officer of SaaS unicorn Druva.

Druva is now offering Microsoft Office 365 and endpoint data protection services free for six months to new customers.

“It is clear that malicious actors are trying to leverage this situation for their own gains…Teams need to ensure data remains protected from malicious actors, and we are working to support businesses of all sizes, including non-customers, to minimize exposure of business-critical data. This has resulted in a wide range of discussions with customers and prospects about how to combat this new business environment. We’re seeing a large number of them seeking additional support to protect their now largely mobile workforce and expedite cloud migrations,” he added.

Neeraj Sharma, vice president – human resources of FourKites, a SaaS-based supply chain visibility solutions startup, said collaboration tools have reached “a new high in utilization worldwide.” “SaaS products have the inherent advantage of ease of adoption by being successfully deployable – training and getting the products to production mode can be done remotely and in a very short period of time,” Sharma said. He added that a recent virtual summit the company hosted had 1,039 participants from across geographies and verticals.

Flat or negative growth for IT sector in 2020 due to Covid-19: Infosys CFO

Source: Business Standard, Apr 04, 2020

Bengaluru: India’s information technology sector is expected to post either flat or negative growth in 2020 due to the impact of the Coronavirus pandemic globally, an IT industry veteran said onSaturday.

“Look at the economic activity (globally). Worse than what you have seen in 2008 (global financial crisis).

So, clients (of Indian IT companies) are not going to increase spending (on IT) or even maintain the current spending,” the former Chief Financial Officer of IT major, Infosys Ltd, V Balakrishnan told PTI.

There will be cut in spending, and could be pressure on pricing because all the major industries including retail and financial services have been adversely impacted, he said, also noting surging unemployment rate in the US.

“Economies are doing badly. Spending is not going to happen. I think this year is going to be tough for the IT industry,” Balakrishnan said.

The Coronavirus pandemic is like a force majeure, and no amount of business continuity planning will help in this situation, he claimed.

“They (Indian ITcompanies) have to work closely with their clients, figure out how much they can extract; at the same time, they have to keep the cost under control, and manage the current year because in current year if they have a positive growth, that will be a surprise.” “It will be either flat or negative growth this year because everything is happening in the first two quarters, when growth is always good. This year is going to be very tough.

They have to plan their costs in such a way that margins they can (hold on to) so that they can reduce the impact,” he said. Even in 2008 after the global financial crisis, Indian IT companies had some growth because at that time, recovery happened very fast. “This time nobody knows because unless you find medicine for this, this is going to keep coming back; look at Singapore, initially they managed and now they are saying full lockdown. Even US is similar; nobody knows how long this is going to prolong; economies are like titanic ship, everything is frozen now, for you to restart and start the engine kicking is going to take a long time. This year is going to be very tough for IT industry,” Balakrishnan added.

STPI looks at double-digit growth in IT exports

Source: The Hindu Business Line, Feb 17, 2020

Hyderabad: India is targeting revenues of $70-80 billion from software products by the end of 2025. The country, which has emerged as a major player in software exports, is yet to tap the $500-billion software products market.

“We are currently getting revenues of $80-90 billion from software products whereas the global opportunity stands at $500 billion. It is going to grow to $1 trillion by 2025,” said Omkar Rai, Director- General of Software Technology Parks of India (STPI).

The country has launched a policy to increase the software product segment. To make this happen, tier-II and tier-III cities too should contribute.

He said exports (from STPI registered firms) would grow by double digits in the current financial year. “We will compile the figures in September. The STPI exports for the year 2018-19 stood at ₹4,24,000 crore,” he said.

Citing the numbers released by Nasscom (National Association of Software and Services Companies) recently, he said the figures compiled by the IT association pegged IT exports at $147 billion in revenues in 2019-20, an 8.1-per-cent growth over last year’s numbers. The IT and electronics sector as a whole registered revenues of $191 billion as against $177 billion in the previous year.

India’s IT sector to grow 7.7% in FY20: Nasscom

Source: The Economic Times, Feb 13, 2019

BENGALURU: India’s information technology and back-office sector is expected to grow 7.7% in fiscal 2020 to $191 billion, with exports touching $147 billion, the National Association of Software and Services Companies said on Wednesday.

The industry body said the sector added 2,05,000 jobs in the ongoing fiscal year, up from the 1,85,000 jobs it added in FY19. The sector is still ‘cautiously optimistic’ about the next financial year starting April, officials said.

Nasscom president Debjani Ghosh said it was a “good” performance by the sector. “Any industry that delivers more than 7% growth is a strong industry. We cannot tell if this is the new normal, but when the world economy is growing at about 3%, then this is good growth,” Ghosh said.

Nasscom senior vice-president Sangeeta Gupta said the industry added $14 billion in new revenue, a significantly higher amount than in the past. “It is important to look at this as the (revenue) base increases,” Gupta said.
Since last year, Nasscom discontinued issuing annual growth forecast before the start of the year. Instead, it shares a survey of global CEOs on their confidence in spending on technology. According to the latest survey, 57% of CEOs expect FY21 growth to be similar or better than FY20.

Accenture launches largest interactive experience centre in Mumbai

Source: Business Standard, Sept 24, 2019

Mumbai: Software consulting giant Accenture has opened its largest interactive experience centre in Mumbai.

This is the sixth such facility by Accenture Interactive, the marketing managed services arm of Accenture, which contributed $8.5 billion to the company’s business in 2018.

This centre serves as the hub of Accenture’s “experience activation network” – a collection of state-of-the-art sites worldwide that deliver marketing and brand solutions. “We have one of the most powerful experience activation networks globally and Mumbai is the largest and most important centre within that network.

The solutions here will focus on data analytics and insights, target segmentation and content creation along with customisation apart from programmatic delivery and measuring the performance of campaigns on a daily basis, ” said Nikki Mendonca, President, Accenture Interactive Operations. Read the rest of this entry »

HCL Tech overtakes Wipro to become third-largest IT services firm in India

Source: Business Standard, May 10, 2019

New Delhi: HCL Technologies (HCLT) on Thursday surpassed Wipro to become the third-largest IT services firm in India in 2018-19, making the first change in the pecking order of the country’s $170-billion IT outsourcing industry in the last seven years.

The Noida-based IT services firm announced its revenues touched $8.63 billion in the last financial year, a rise of 10 per cent over the previous financial year.

In constant currency terms, the rise was 11.8 per cent.

Wipro, in comparison, posted IT services revenues of $8.12 billion, up 3.8 per cent over the preceding financial year.

Last year, Wipro’s full-year revenue totalled $8.06 billion, more than $220 million above HCL Technologies’ $7.84 billion. Read the rest of this entry »

Why the IT industry in India may be staring at a decline in growth this fiscal

Source: LiveMint.com, Apr 08, 2019

MUMBAI: What goes up must come down. India’s information technology (IT) exports are estimated to have risen 9.2% in FY19, faster than the 7.8% growth in the preceding fiscal, according to industry lobby group Nasscom. With major IT companies set to report FY19 results and provide an outlook for the new fiscal, a moot question is if growth rates will scale down.

After all, apart from the high base effect for some companies such as Tata Consultancy Services Ltd, the industry needs to contend with a global slowdown. This double whammy has already hit growth at Accenture Plc, which reported results for the quarter ended February late last month. The company’s financial year starts in September and ends in August.

In the quarter ended August 2018, Accenture had reported revenue growth of 11% in local currency terms. But this year, growth slowed to 9.5% and 9% in the first and second quarters, respectively. Based on its guidance for the rest of the year, growth is estimated at 8.5% and 7% in the third and fourth quarters, respectively. Read the rest of this entry »