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Published: Aug 29, 2019
Updated: Aug 29, 2019

IT Sector Shining In A Gloomy Sky

As the current business slowdown sweeps across the Indian economy, it is having an adverse impact on corporate performance. Little wonder then that the corporate show during the second quarter of fiscal 2020 was tepid, with most sectors including automobiles, construction, steel, textiles, FMCG, paints, shipping and pharmaceuticals putting up a weak to listless performance. However, there is one sector that has spread cheer among its stakeholders — Information Technology. Most of the leading IT companies have come out with a steady to gratifying performance. There are certainly no signs of a slowdown here!

And this is not all. More opportunities are in store for Indian IT majors after Accenture reported a 1.4 times book-to-bill for outsourcing. To be specific, Accenture reported a $ 6.8 billion bookto- bill for outsourcing while the revenue for the quarter was $ 4.9 billion. (Book-to-bill refers to the value of booked orders over revenue in any particular quarter).

BOOM FACTORS

The reasons for the IT industry bucking the Indian economic trend are not hard to see. With innovation being a sine qua non for every industry, technology has now become a basic need for survival and growth of business, and even society at large. With growing competition and changing technologies, the IT industry is entering newer and newer segments. (See the box on these pages). A year ago, Artificial Intelligence, Internet of Things, Virtual Reality, Machine Learning and Deep Learning came on the scene. Experts believe that going ahead we will see a convergence of these across different applications to create an unimagined future for humans. Maintains an expert, “Every industry will look at innovative ways to use technology to further improve customer experience, reduce the time to market significantly and improve operational efficiency, thereby reducing operating costs.”

Says another expert, “Now, business organisations are heading towards becoming digital companies, enabling their customers to perform most functions on their smartphones or on the web without visiting a shop .This change is the result of technology becoming the core of business. For example, Ola, Amazon and Flipkart are technology businesses. The increasing use of technology by businesses has resulted in the rapid growth of the Indian tech services segment. During the last decade and a half, the industry grew to $ 185 billion from $ 28 billion.”

Despite the headwinds from the overall global slowdown, the Indian IT industry is on the growth path, innovating new concepts, expanding business operations and keeping the flag of India flying high in the global tech world.

The $ 185-billion Indian IT industry contributes around 7.9 per cent to the country’s GDP. It has emerged as a fabulous job creator, adding around a lakh jobs every year. Today, the country’s highly qualified talent pool of technical graduates is one of the largest in the world, facilitating its emergence as a preferred destination for outsourcing. Computer science accounts for the biggest chunk of India’s fresh engineering talent pool, with more than 98 per cent of engineering colleges offering this stream.

Increasing competition, pressure on billing rates of traditional services and increasing commoditization of lower-end services are among the key reasons forcing the Indian software industry to make a fast move up in the software valuechain. New digital technologies like social media, mobility, analytics and cloud computing (SMAC) have permanently changed the way Indian IT firms do business.

GLOBALISING INDIA

In fact, the booming IT sector has emerged as one of the biggest factors that has helped India make its mark on the world map. Today, the sector is regarded as a hub of innovators, providing world-class technology solutions across the globe. Leading international organisations led by Google, Accenture and Goldman Sachs have set up their offices in India. The IT sector has helped the domestic economy to integrate with the global economy. It has given birth to e-governance practices, as a result of which people now get easy access via e-health, e-education, e-ticketing, etc., to various government services.

Today, almost everything can be done online, whether it is shopping, ticketing, filing income-tax returns, getting admission in schools and colleges, getting passports, booking tickets for cinema shows and cultural programmes, etc. Needless to say, the IT sector has succeeded in transforming the Indian economy from an agriculture-based one to a knowledge-driven one.

The IT industry is spreading its wings internationally. The global sourcing market in India continues to grow at a high pace, and the country has emerged as the leading sourcing destination across the world, accounting for the lion’s share of the $ 190 billion global services sourcing business. Last year, Indian IT and ITeS companies set up over 1,000 global delivery centres. Today, India has become the digital capabilities hub of the world with around 75 per cent of global digital talent here.

The industry is on the growth path. While global business is on the rise, spending on IT at home is expected to grow at a rate of over 9 per cent to reach the $ 100 billion mark within a year or two. Nasscom, the country’s association of the IT industry, has forecasted the size of the Indian IT industry at $ 350 billion by 2025.

The domestic IT industry is flourishing with hundreds of companies coming up. However, US restrictions and growing competition have led to consolidation and fundamentally strong companies that are capable of moving with the times and are strongly innovative have succeeded in scaling new highs. We have suggested here 10 prominent companies which are worth investing in – of course, at the right price level. They are:

10 EXCITING NEW TECH TRENDS

Emerging technologies usher in new era

Information technology, which has revolutionized the way we work and live, is itself undergoing radical changes with the emergence of exciting new trends.

According to Malcolm Frank, this is the fourth wave of technology services. The first wave of technology was the mainframe, where the IBM Global Services model was popular. The second was the client server model (the desktop era) where companies like Accenture played a dominant role. The third was Internet services that saw the rise of offshoring and global sourcing and the rise of companies like TCS, Cognizant, Wipro, HCL and Infosys. Now, it is the fourth wave where business are becoming digital and are viewing transformation on the back of technologies and platforms like social, cloud, mobile and analytics. Thus, there will be fewer jobs, more automation and decreasing size of deals, and start-ups will take on multi-billion dollar services players more aggressively, according to industry stakeholders and tech analysts.

The ten revolutionary emerging trends which have set to usher in a new era of growth are:

1) Internet of Things (IoT)

One of the biggest tech trends to emerge in recent years is the Internet of Things. Simply put, IoT is the idea that all technological devices can be connected to the internet and to each other in an attempt to create the perfect marriage between the physical and digital worlds. It can be a fitness tracker, a thermostat, a lock, even a light bulb. Its impact depends on the industry. For example, for those who work in marketing, advertising, media or business management, IoT could provide a wealth of information on how consumers engage with products by tracking their interactions with digital devices. In turn, this data could be used to optimize marketing campaigns and user experiences.

2) Artificial Intelligence (AI)

Of late, Artificial Intelligence (AI) has become a muchtalked-about topic among industry giants as well as the public. As the name suggests, AI refers to the level of intelligence demonstrated by computer machines; i.e., any device that can recognize its immediate surroundings and take actions based on its perception of the same. In simpler terms, the term is mostly used to define the moment when a machine is able to mimic cognitive functioning like problem-solving and reasoning, which is mostly associated with the human mind. While its implications are still being debated by several industry experts, it can be said that Artificial Intelligence will certainly transform the IT sector in the years to come.

3) Mobile Technology

We have seen that mobile devices are becoming more consistent within the current global environment. It doesn’t mean that there will be ‘more mobile users’ but also what is behind the entire trend. The world is moving away from the traditional brick-and-mortar style of commerce, and e-commerce is set to grow even more going ahead.

India’s e-commerce is set to hit $ 25 billion in 2019 with mobile sales taking a whopping 70% of this chunk. We’ll be seeing an increase in new mobile apps, support and services and of course coding (of which India is one of the leading providers). Mobile will also be integrating into different areas such as finance, health, data collection and communication. As we see this trend rise, we will begin to see more Indians getting mobile devices and incorporating mobile-related services to cater to a growing global demand.

4) Cloud Computing

Cloud technology will play a pivotal role over the next few years to sustain the increase in mobile technologies. Not only is cloud technology cheaper than storing all your data yourself, it also provides exciting opportunities for companies to increase inter-personal efficiency, allowing people to speed up production, reduce costs and turn more significant profits. India will be investing and developing greater cloudrelated solutions over the next few years. The corporate sector will be a major beneficiary as cloud adoption will be moving towards cloud-first strategies. Investing in cloud-first technologies will prove to be beneficial for businesses by reducing the equipment and hosting costs, streamlining operations, and increasing capacity and productivity. Cloud-first solutions will help in keeping companies agile and flexible.

5) Virtual Reality (VR)

Although Virtual Reality (VR) has been around for some time now, the technology is far from becoming a done deal, and its application is proving to be a massive success across multifarious industries. The VR technology combines physical spaces with simulated environments, allowing users to experience and move around in a virtual world via VR headsets, and can transport their presence into an imaginary, yet hyper-realistic world. VR is already being utilized across different segments like gaming, healthcare, education, and arts & entertainment, and is being developed for use across more fields in future.

6) Machine Learning

Another exciting emerging technology is machine learning, which is essentially a computer’s ability to learn on its own by analyzing data and tracking repeating patterns. For example, social media platforms use machine learning to get a better understanding of how you’re connected with those in your social network. They do this by analyzing your likes, shares and comments and then prioritizing content from your closest connections, serving you that content first.

In addition to shaping your day-to-day interactions with friends on social media, machine learning is also changing the way companies do business with customers. According to Deloitte, companies like Google are using machine learning on mobile devices which can continue learning even when offline. Needless to say, machine learning is reshaping the way businesses interact with their customers in a big way by helping them anticipate and meet customer needs more easily.

7) Cognitive Technology

Cognitive technology is in the same vein as machine learning and virtual reality, except that it’s a broader concept. For example, the cognitive technology umbrella includes things like natural language processing (NLP) and speech recognition. Combined, these different technologies are able to automate and optimize a lot of tasks that were previously done by people, including certain aspects of accounting and analytics.

Although cognitive technologies have a broad range of applications, Deloitte predicts that the industry sector most affected by this trend initially will be the software sector, with 95% of enterprise software companies projected to adopt these technologies by 2020.

8) Smart Cities

As our technology becomes more intelligent and cheaper, integrating it into every aspect of society is a natural step. The Internet of Things is becoming more pivotal in the development of cities. Smart Cities will take all of the available technologies and streamline them into a seamless experience for the individual.

It will collect data and provide relevant information to assist with an individual’s decision-making process. If you need parking, finding a specific product or service, or just turning on and off the street lights for power conservation, the IoT environment will only get bigger. Currently, there are roughly 20 cities that have a substantial action plan to incorporate this into a real-world scenario.

The government wants to develop an IoT worth $15 billion over the next six years. It is one trend that is going to happen; we’ll just have to wait and see how it pans out.

9) Cyber Security

It is something that is becoming more important as we transition our sensitive data to technology. Both the government and companies have placed a heavy emphasis on cyber security. It includes deploying solutions for data breaches, perhaps through blockchain technology that is currently enjoying a lot of global attention.

Encryption is also a critical aspect of cyber security. As we become more integrated with technology, encryption processes will become more necessary. People are now becoming more focused on privacy and keeping personal information safe from unwanted eyes.

Perhaps the most pressing danger to the future of the Internet is the rising scope and breadth of cyber threats. As new technologies such as AI and IoT increase our dependence on the network, the severity of security challenges and vulnerabilities grows in parallel. At the same time, the continued success of the Internet as a driver for economic and social innovation is tied to how we respond to these threats. Insufficient attention to security will undermine trust in the Internet. Indeed, human safety is at stake. Stakeholders must do more to mitigate cyber threats — we may need to consider new accountability, incentive and liability models to encourage stakeholders to dramatically increase cyber security readiness and reduce vulnerabilities.

10) Intelligent Things & Apps

Intelligent Things is one of the newest technological hybrids on the block, and promises to disrupt the field of IT for the better. Combining aspects of AI and IoT, Intelligent Things refers to any object that can predict actions based on its use by humans. Such smart devices are increasingly becoming popular across the world, as well as increasingly common. Some prime examples include home appliances, medical instruments and automobiles.

Intelligent apps are becoming the norm as they are making it extremely easier for people to manage their day-to-day activities without any hassle. These smart apps are capable of responding to voice commands and enable efficiency.