There are couple of articles recently in ET, Business Line on the challenges our IT industry is currently facing. Due to a steep fall in the crude oil prices in previous fiscal, IT investments by clients in the energy vertical have delayed, reduced and some are cancelled. Telecom services providers are also not doing well and hence the revenues from those accounts had a hit. Also there is this cross currency impact While there is stagnation/decline in the incremental revenues of IT majors like TCS, Wipro, Infy, HCL for the last year we should also understand the drastic changes in the way IT business is undergoing.
Unlike previous times, there are many small firms who possess consulting capabilities and are able to sustain in the market by having a kind of conversations clients want. While all IT majors have strong consulting capabilities, the technology is changing at a drastic level where IT majors are having challenges to go to customer and say “this is what your business problem is, and we can solve with this ‘new’ technology”, says Forrester Research.
Let us speak about Cloud. Well, Cloud is not a new technology at least when we see time vs technology changes, but the business strategies associated with cloud are changing. Cloud is gradually disrupting the enterprise software and hardware industry by being easy to scale up the infra and being cost-effective. It is making computing services / resources available on internet. Cloud makes infrastructure like Storage, Servers, networking as a service. This reduces the infrastructure maintenance needs, and, hence, infrastructure services will reduce. Mid-range clients who don’t have huge infrastructure prefer cloud-based systems. This will hamper the sections of infra business in IT companies.
At the same time automation and robotics are also booming along with cloud. With burst of new technologies and delivery models there is high competition in pricing too.
However, there is still time to adapt, experts say, irrespective of new developments though the changes are drastic. At the same time client relationships matters over the price. Again IT majors have their plans in place. Wipro and Infosys has already made large acquisitions/investments in automation companies, and in startups. ET says Wipro is planning to improve the efficiency and bring the reduction of 30% in it headcount in next three years by investing in automations and artificial intelligence and digital technology. Infy CEO Sikka too mentioned “New areas in Infosys of automation and innovation will constitute a tenth of total revenue by 2020.” TCS has its own innovation Labs.
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