Quick Take.

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Quick Take
Is India’s information technology services
industry headed for a fall?
We asked... R. Sivakumar, MD, Sales and Marketing, South Asia, Intel, Srikanth Ramachandran, President and CEO,
NTrust Infotech, Ajit Pillai, Country Manager, India and Saarc, Secure Computing, Shashank Samant, President Ness North America
and Head of the High Tech and Software Vertical, Sudin Apte, Country Head, Forrester Research, Kaushal Mashruwala, MD, Savvion
India, Neeraj Bhargava, CEO, WNS Global Services, Pawan Gulani, Manager, Strategy, Finance, Reliance Retail, Prasad Ajinkya,
Head, Solutions Delivery, eYantra India, Ankit Jain, Product Manager, Hewlett Packard India, Amod Verma, Engineer, Qualcomm

“ The infrastructure support is

minimal and workers imbibe no
“ The IT-services industry has
always shown swiftness to change
“ There are all the signs of a
rationalisation of growth in the

” ” ”
managerial capabilities. and innovate. Indian IT industry.
Pawan Gulani, Manager, Strategy, Kaushal Mashruwala, Managing Sudin Apte, Country Head,
Finance, Reliance Retail Director, Savvion India Forrester Research

[]
YES BECAUSE: Unlike the stockmarket bubble, which keeps popping every second week, the
Yes
IT and IT services bubble has been the subject of much speculation ever since the dot-com bust of
2000. This is because of burgeoning deal sizes, despite high attrition rates, lack of any significant
support from the government, lack of infrastructure to sustain growth and the lack of interest and/or

18%
capability amongst the smaller players to move up the value chain. In light of such factors, some of our
respondents did believe that the IT industry is, indeed, headed for a fall. Some felt that there is no focus
on IT products in the Indian market. Instead, the business orientation of most of the big players as of
now is on projects, so much so that they simply base their financials on projects and their profitability.

[]
NO BECAUSE: Despite all the above factors working against the Indian IT and IT services

No
industry, there are still some who make a strong case for its potential for further growth and survival.
Mostly insiders from the Indian IT industry, this lobby believes that the so-called ‘IT bubble’ doesn’t
even exist. So, any talk of it going bust is mere uninformed speculation. Some believe that the industry

73%
is likely to face challenges in the form of a slowdown in the US economy, employee cost and rupee
appreciation. Although these factors may affect the performance of the Indian IT services industry over
the next few quarters, it is not a long-term problem. Also, some felt that the industry is just maturing
and one can only expect to see growth and consolidation in the industry.

[]
MAYBE BECAUSE: The recent happenings at the IT services major Tata Consultancy
Maybe
Services have evidently left the IT community shaken up. According to Sudin Apte, the India country
head of Forrester Research, spending growth in the IT industry has gone down by half from about 6 per
cent to less than 3 per cent over the past year. Customer satisfaction has also dropped in the recent

9% past. Given such figures and the recent turbulence in the industry, some believe that the Indian IT
sector may actually be headed for a rationalisation of growth if not a fall. Some say, the meteoric growth
in the past is likely to settle down to more humble levels. So, even though the size of deals and the
complexity of work done has been going up, there may be grim times ahead for the industry.

25 FEBRUARY 2008 18 BUSINESSWORLD