Indian IT Industry - Moonshots: Aye; Pretext of Moonlighting: Nay

A #sunriseindustry is characterized by the high growth potential and persistent momentum of economic rise in a short span of time along with a brighter outlook for the sector on the horizon, mostly led by of #innovation or inventive ideas. Contrary to it, a #sunsetindustry stares at the prospect of a stunted growth facing commoditized products and services from intensified competition and high-cost structures along with blunting of past maverick edges into #obsolescence.

Shifting lifecycle stage in 5 decades journey of Indian IT Sector

Sluggishness in global economic outlook and continued geopolitical maneuvers have generally degraded the business confidence globally. Witnessing diminishing #techspending across sectors, market analysts have now turned more vocal about longer-than-expected slowdown for Indian #ITservices sector. With withering deal flows and unusually protracted negotiations even on small size deals, some analysts have gone to the extent of predicting a complete washout in remaining part of financial year 2024. It has triggered a new debate - is there any substance in naysayers’ prediction of doom and gloom about the Indian #ITindustry sliding on a slippery path of rapidly turning into a sunset industry?

In backdrop of millennium bug #Y2K acting as the lucky charm, around $3 bn sized Indian IT Industry in 1999 zoomed to become $70 bn business in 2009 –galloping almost at annual CAGR of 40%, mostly driven by #outsourcing and #offshoring deals. With a workforce of 4.4 mn, the industry had grown to a size of $194 bn in 2020 – though growth sizably paced down to mid-high single digit rates. Coming out of early anxieties and exhibiting strong sign of recovery in pandemic times, buoyancy of #digitaltransformation deals in FY2022 not only lifted the sagging spirit of #IndianITcompanies but also their growth profile – many crossing the threshold of single digit rate for the first time in recent years. Though, short-lived euphoria of #digitalrevolution abruptly turned to be anxiety-filled in wake of Russia-Ukraine conflict and more recent banking crisis. With an annual revenue growth of 8.4% in a #nonormal environment, #NASSCOM estimates Indian IT industry having grown to $245bn size in FY23 with 5.4 mn workforce.

Generative AI: a benign force or a deadly threat for IT services

The frenzy created by #GenerativeAI in recent months has led to increased interest in AI-led capabilities in varied domains. As the AI adoption curve is bound to surge across the industry segments, #AIpowered innovation and #intelligentautomation pose to disrupt the staffing-centric business model of Indian IT companies. It will be bit too early to comment that the industry stares at an uncertain future – certainly not necessarily turning to be bleak. In its over 5 decades journey, it has navigated through many similar phases – coming out stronger and more evolved each time. However, inhibited by self-professed caliber to find a blissful place in time-tested construct of piggybacking hyperscalers in digging the #ITOps trenches, laying the conduits to #AImodels and fixing the leaky #datapipelines has limited upside prospect to grow in the value chain.

New competition from Global Capability Centers

While contours of threat from Generative AI is yet to conclusively shape and become imminent, more formidable and immediate challenge emerges from the rapid evolution of Global Capability Centers #GCC in recent years. And mind it, GCCs have been succeeding by mimicking IT companies’ proven operating model in their own turfs – of course, by more aggressive #talentpoaching. With $47 bn market size, 1.9 mn workforce engaged at 1580+ GCCs in 2023, GCC sector has grown relatively at a faster CAGR of 11.4% between 2015-2023.

As per recent EY vision 2030 report for the sector, with an expected CAGR of 14% between 2023 to 2030 number of GCCs is expected to grow to 2400, forming $110 bn market size and headcount of 4.5 mn in 2030. #India emerging as one of prime centres in shifting global supply chains, the above trend of the GCC sector is certainly bound to gain more strength with an accelerated growth pattern. While the trend appearing to be good sign for the national economy, it could be hardly music to IT industry protagonists’ ears.

Regaining the mindset of maverick to take bold moonshots

Certainly, changing dynamics of competition in already cloudy no-normal business environment makes any drastic change in the course by #IndianITcompanies fraught with many unknown risks. Yet, finding new alibi or excuse each passing quarter neither enthuses market confidence nor provides a permanent succor for the benefit of companies. Remember, how the insinuating stories of?#moonlighting?in recent period have badly misfired – falling flat on IT honchos’ face. Equally imprudent is perpetuating endless #revolvingdoor situation and directional chaos across major IT companies, while nonchalant indulgence in LEGO building blocks game plays havoc across the organizational layers.

Freeing from the confines of closed mindset and adopting a #futureback thinking, it is time for IT companies to go off the beaten track and take a few bold?#moonshots. While landing at the moon may not be certain, their bold move is bound to unravel a completely new value path.