Digital disruption will create new winners, says Tech Mahindra’s CP Gurnani
, ET Bureau|
Mar 01, 2018, 11.05 AM IST
India’s nearly $167-billion IT services industry could see laggards struggle to grow as technology shifts disrupt business but will also see winners emerge stronger and grow faster riding on the digital wave says, CP Gurnani, CEO of Tech Mahindra.
The Indian IT services industry, which is projected to see single-digit growth for the three consecutive years beginning 2016-17, is witnessing fastest growth through services offered using digital technologies cloud computing, artificial intelligence, and machine learning. But, the digital growth has not been adequate to offset the decline in traditional technology services, which still makes up the majority of revenues for companies such as Tata Consultancy Services, Infosys, Wipro, Cognizant, HCL Technologies, Tech Mahindra and others.
“On an individual basis, you see the industry shift is happening and whenever the shift will happen there will be survivals and there will be people who will thrive. And when you start making that balance, I think, there will be more people who will thrive but there will be some people who will find it difficult to survive,” Gurnani told ET in an interview. He explained that the shift in the industry includes aspects such as engineering and R&D services getting prominence, collaboration with startups, focus on deep technology and other disruptions during the past half a decade. Nasscom, the IT services industry body, forecast a 7-9% growth in 2018-19.
Gurnani believes that this growth is encouraging, especially during this technology shift. “During this shift, 7-9% is actually a very healthy growth and look at it differently in the global economy people are talking about 0.5-3% growth,” he said.
Software services exporters have also seen a clear change in demand since clients in the US and Europe, the largest export markets, is looking for “more services” at “lesser budget” for IT.
This, analysts said, would push these companies to increase share of digital technology services faster.
“I think we are looking at 2-5 year (digital) transition with lot of contracts are now being renewed… service providers are going to have to step out and really work on that delivery so they get better automation and better digital technology,” said Phil Fersht, chief executive, HfS Research.
Tech Mahindra chief executive, however, does not foresee large-scale consolidations as integration of teams may prove to be an uphill task in a people-centric industry such as IT.
The Indian IT services industry, which is projected to see single-digit growth for the three consecutive years beginning 2016-17, is witnessing fastest growth through services offered using digital technologies cloud computing, artificial intelligence, and machine learning. But, the digital growth has not been adequate to offset the decline in traditional technology services, which still makes up the majority of revenues for companies such as Tata Consultancy Services, Infosys, Wipro, Cognizant, HCL Technologies, Tech Mahindra and others.
“On an individual basis, you see the industry shift is happening and whenever the shift will happen there will be survivals and there will be people who will thrive. And when you start making that balance, I think, there will be more people who will thrive but there will be some people who will find it difficult to survive,” Gurnani told ET in an interview. He explained that the shift in the industry includes aspects such as engineering and R&D services getting prominence, collaboration with startups, focus on deep technology and other disruptions during the past half a decade. Nasscom, the IT services industry body, forecast a 7-9% growth in 2018-19.
Gurnani believes that this growth is encouraging, especially during this technology shift. “During this shift, 7-9% is actually a very healthy growth and look at it differently in the global economy people are talking about 0.5-3% growth,” he said.
Software services exporters have also seen a clear change in demand since clients in the US and Europe, the largest export markets, is looking for “more services” at “lesser budget” for IT.
This, analysts said, would push these companies to increase share of digital technology services faster.
“I think we are looking at 2-5 year (digital) transition with lot of contracts are now being renewed… service providers are going to have to step out and really work on that delivery so they get better automation and better digital technology,” said Phil Fersht, chief executive, HfS Research.
Tech Mahindra chief executive, however, does not foresee large-scale consolidations as integration of teams may prove to be an uphill task in a people-centric industry such as IT.
