Just like his predecessor Kiran Karnik, new Nasscom president Som Mittal comes at a time when the IT sector is under pressure from slower growth rates, a threat of a possible recession in the US (which accounts for a bulk of the revenues of most Indian IT and BPO companies). The IT lobby group with Mittal at the helm during these testing times is also now working with universities to rehaul existing curricula, besides working on ‘employability’ issues.
In an interview with Venkatesh Ganesh, Mittal talks about the future of India’s IT companies.
How are Indian companies positioned against the slowdown in the US economy and a possible recession?
In the US, clients have been talking about a possible cut in technology spends, but the situation is not yet clear. Indian companies are cautious about the outlook. Having said that, the demographics of business are changing. There is not enough talent in the West, which remains one of the main reasons for outsourcing to continue. The growth of companies will slow down as they get bigger in size and pressure on margins have already kicked in. That’s the time when innovation in business processes come in. After two quarters, IT companies will reinvent themselves and tide over current problems.
Does that mean Indian companies would be seen upon more than just cost arbitrage?
Outsourcers are already looking at India for more than cost. India is a costly place to do business and other destinations like China and Philippines offer cheaper alternatives, though not in such numbers. For outsourcing, companies are looking to decrease time-to-market and innovate faster and Indian companies seem to know the pulse of their customers. Put this in the backdrop of a recession and companies have to outsource more. Having said that, cost will always be a factor and it would never go away.
What is your view on increasing wage costs and a lack of quality workforce at certain levels?
Availability and ‘employability’ of workforce is a huge concern for the whole services sector. We have to scale up the availability of new talent and make them ready to work from day one. I refuse to believe that there’s a skill shortage, but there is a shortage of ‘employable’ talent. Companies who were bearing these costs do not have the time and luxury of training people during these times.
What is the future of Indian IT?
We have addressed only 25 per cent of the global outsourcing market, so there’s still a huge market out there. Companies have to build domain expertise in specific sectors and build intellectual property around it rather than go after every sector. For building domain expertise, they will have to look at the organic or acquisition route. Also, niches like remote infrastructure management, which can manage IT of companies from any location, is now possible with advancement in technologies.
Som Mittal, President, Nasscom