For Indian IT, good times continue to roll

On December 18, the National Association of Software and Services Companies (Nasscom), an apex lobby group for the Indian IT industry, held an event to celebrate its 25-year existence, at Bengaluru. The event itself was a mundane one, being part of its rolling, multi-city tour to mark the occasion.

However, four things stood out. The first was the presence of some industry doyens like Ashok Soota and Sudip Banerjee, who helped build Indian IT from a few hundred million dollars of exports in 1994 to $97-$99 billion in a mere two decades. The second was Bengaluru itself, which continues to account for more than a quarter of all-India exports of technology services and software due to its unique ecosystem that enables companies to thrive.

The third was the presence of executives from a number of start-ups, which are likely to power the next phase of growth in the sector. Fourth, and the most important, was the upbeat mood and high level of confidence reflected in the body language of the assembled industry executives. There have been some good reasons why there is optimism in the Indian IT industry. Inspite of its large base, the industry grew by around 15 per cent in the 2014 calendar year and the momentum is expected to continue next year too. Indian IT players continue to get an ever-larger share of the IT outsourcing pie.

Domestic IT market, which was seen as moribund primarily because of the policy paralysis of the previous government, has seen an uptick. This has been driven by the new government's vision of creating a Digital India and Smart Cities, which are likely to create opportunities for technology companies.

With nearly three new start-ups being launched every day in the technology sector, the start-up scene attracted attention and investments from global investors. Facebook, Google and Yahoo acquired Indian companies.

The year also saw leadership transition at India's second-largest technology services exporter Infosys. For the first time a non-promoter, Vishal Sikka, became the CEO of the company. The other top-tier services companies like TCS, Wipro, Cognizant and Tech Mahindra also continued to grow on their large base. With investments in the SMAC stack (Social Media, Mobile, Analytics and Cloud), Indian IT kept itself relevant by adapting to changing technology requirements.

The IT-ITES industry in the country today constitutes about eight per cent of the GDP. The IT industry, both domestic market and exports included, is about $120 billion in size and directly employs a little over three million people. Inspite of increasing automation and enhanced productivity, the industry added more than 1.5 lakh direct jobs in 2014 alone. While it took 15 years to reach $100 billion in size, the industry is likely to reach the next $100 billion in just five years.

While Indian IT closed 2014 on a strong note, there are a few areas of concern. Slowing global economy, increasing regulatory requirements in some large markets like the US and Europe, high attrition, and disruptive technologies will all prove to be a challenge in the year to come. However, 2014, which started off on a slow note, is ending with a bang and the industry will be hoping to sustain this in 2015 too.