Business Today

Challenging times likely to continue for IT sector

The information technology industry in India has a challenging and an uncertain year ahead, say many business leaders.

IANS | December 31, 2012 | Updated 13:05 IST

The information technology industry in India has a challenging and an uncertain year ahead, feel the business leaders in the sector in this technology hub.

However, they believe the IT companies could use this uncertain period as an opportunity to make investments to increase their competitiveness.

"Such periods of uncertainly in the past have provided a great platform for organisations to refine strategy and execute initiates that increase competitive advantage and accelerate growth," said B.V.R. Mohan Reddy, chairman and managing director, Infotech Enterprises Ltd, a global technology solutions provider.

As a sector emblematic of globalisation and international trade, the Indian IT industry will also see a slowdown in growth, he noted.

The Indian IT industry's estimated export growth will be approximately 11 per cent, down from 16 per cent a year ago.

Mohan Reddy believes that the IT companies will look at expanding the delivery capability beyond India to leverage the global expertise, invest in creation of intellectual property and continue to improve the talent pool in the country.

Suman Reddy, vice-president and managing director, Pegasystems Worldwide India Pvt. Ltd, is of the opinion that the recovery of the global economy will have a positive impact on the IT sector globally as well as in India.

"Moreover, the Indian IT industry is witnessing a growth in niche sectors such as healthcare and insurance. With the healthcare reforms by the US to bring a new dimension to the Indian IT industry, we expect to see a lot more innovation and growth in the coming year," he said.

He wants the government to create tax reforms to encourage start-ups and smaller companies and to focus on public-private partnership.

With severe electricity shortage impacting the sector in Andhra Pradesh, Suman Reddy underlined the need for steps to improve the situation and also for widening the roads at key junctions in Hyderabad and for easier government interfaces.

According to the IT and ITeS (information technology-enabled services) Industry Association of Andhra Pradesh, the sector in Andhra Pradesh achieved a turnover of Rs.53,246 crore in 2012, crossing the Rs.50,000-crore mark for the first time.

Andhra Pradesh is the fourth-largest IT exporter in the country, accounting for 12 per cent of India's total IT exports.

Ramesh Loganathan, vice-president, Progress Software India, hoped that during 2013 the industry would continue to improve its efficiencies and move up the value chain.

"Initiatives triggered by the start of recession in 2009 are now continuing to be relevant with pricing pressures and reducing cost arbitrage with wage increases and reduced growth.

"The modest 11 per cent growth projected by NASSCOM notwithstanding, the efforts to improve profitability and to increase high value services and IP creation are actively underway, especially in Hyderabad," he said.

Pointing out that while Hyderabad is way better than other cities like Bangalore, with a better planned growth and good core infrastructure, he called for improving the public transport.

V. Laxmikanth, managing director, Broadridge Financial Solutions India Pvt. Ltd, believes that India's growth story is here to stay. "From the IT industry perspective, I see that it can be a great leveler and transform lives. The key is to make growth inclusive," he said.

He said while the "raw" talent base is good in India, the challenge is that the education system and social framework do not encourage independent thinking and creativity.

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