The growth rate of 8 per cent for the Indian IT industry, as per the Economic Survey, indicates that single digit growth which was highlighted in the survey is mediocre and indicates that things will remain the same for sometime. Some of the experts, with whom THE WEEK spoke, said that though there are indications of a rebound, it will take time. “The survey report indicates that the overall IT services environment is still challenging and it will take some time before good growth happens for the Indian IT services sector. Growth rate of 8 per cent is medium and neither good or bad,” Alok Shende, of Mumbai based Ascentius Consulting told THE WEEK.
Interestingly, as per a report by the rating agency, CRISIL, the share of digital services in the software exports are expected to double – about 30 per cent – by fiscal 2020, as the segment is growing at 30-35 per cent annually. The report further says that the overall IT revenue is expected to grow at 8 per cent per annum until the fiscal 2020, driven largely by digital services.
Experts point out that as per the CRISIL report though the digital services will double they feel that traditional services will not vanish soon and are here to stay. “There has been a shift towards the digital businesses and many digital contracts are expected in the near future. Digital contracts that were just the proof of concept earlier are expected to transform into large digital contracts. Companies are building IoT (Internet of Things) backbone, cloud based systems, and are expanding their digital footprint and hence will require digital services. However, traditional services such as application development and maintenance, which are the bread and butter of the Indian IT services companies will always bring business to the Indian IT sector. They are infact expected to grow along with the growth in US and European market. Though their growth will be less, when compared to the digital services business,” explained Amit Chandra, Vice President IT, HDFC Securities.
On the other hand experts such as Kris Lakshmikanth, the founder of Head Hunters India Limited, is optimistic about the growth in the digital services segment but he says that it may not be only at the global level but the Indian domestic market can also bring in a whole lot of opportunities for the Indian IT services players. “I agree with the economic survey report of about 8 per cent growth for the Indian IT sector which I feel will rally around 6-8 per cent per annum for the next couple of years though growth is gradually happening. Traditional businesses such as application development and maintenance will continue to grow and will not decline but the growth will be slow when compared to the growth in the digital businesses. However, I see huge growth in digital business opportunities in the Indian domestic market itself. There is a huge volume of business that is being generated by the widespread use of smartphones and tablets which will make everything go digital. So besides the global digital opportunity it is the domestic opportunity which needs to be seen,” said Lakshmikanth.