Infosys, TCS to show the way

By PTI Published on May 29, 2017 02:53 PM IST

Chennai: Amid fears that Indian IT has not kept pace with rapidly evolving technologies, search firm Head Hunters expressed optimism that top firms like TCS and Infosys will lead the digital segment.

However, it will be a long-drawn battle as global players like IBM and Accenture, which had invested very early in digital capabilities, command a lion's share of the market, according to Head Hunters India founder and MD, Kris Lakshmikanth.

"Amidst fears that Indian tech companies haven't kept pace to make the shift from traditional to cutting-edge technologies to meet customer demands, I firmly believe that our top companies including TCS and Infosys, just as they made India the outsourcing global giant, will lead India in the digital business too," Lakshmikanth said.

He added that industry captains like TCS, N Chandrasekaran, Infosys, Vishal Sikka and Tech Mahindra's C P Gurnani had clearly understood this dramatic change and the challenges of going digital more than two years back.

He also said Indian IT companies have increasingly been shifting their focus from labour intensive projects to more hi-tech virtual needs like cloud computing, automation and artificial intelligence.

On the other hand, domestic brokerage Kotak Institutional Equities said that the recent layoffs in Indian IT companies are not different from the past and the sector will remain a net recruiter, but the numbers will be calibrated and the impact of automation will be crucial.

"We believe that these adjustments in staff strength are not materially different from earlier years. The IT industry will continue to be a net recruiter with numbers prudently and continuously calibrated by industry revenue growth," Kotak Institutional Equities said in a research note.

Indian IT companies generally let go of 1-3 per cent employees after annual performance measurement and this year, there could be a slightly higher proportion of layoffs around 2-4 per cent, it added. Some of the key factors slamming brakes on IT hiring include slowdown in company growth, decline in attrition rates, acceleration in localisation programme, employee reskilling and changes in the market place.

"Industry headcount addition in 2017-18 would be similar to 2016-17 fi gures or marginally higher, assuming eight per cent revenue growth," the report said, adding that this will be partly offset by higher local hiring in the US. TheĀ  engineering and research and development services are expected to see 7-9 per cent headcount addition while domestic IT and BPO would log a 5-7 per cent rise.

In IT services, there is likely to be 6-8 per cent growth and headcount increase will be 2-3 per cent lower than revenue growth. However, BPO is where the real challenge is, as nearly 38 per cent of BPO export revenues are from customer interaction services, something that will be automated and taken over by chat-bots over time.