Infotech sector swimming against the tide | india | Hindustan Times
Today in New Delhi, India
Dec 06, 2016-Tuesday
-°C
New Delhi
  • Humidity
    -
  • Wind
    -

Infotech sector swimming against the tide

india Updated: Oct 15, 2007 22:17 IST
Highlight Story

A reputed research group uses the term “peak of inflated expectations” in categorising “hot” new technologies and cautions early adopters to expect the “trough of disillusionment” that inevitably follows as reality checks set in -- in the current context, the stock market’s disillusionment with IT star Infosys can probably be considered in the same light.

When a firm is expected to deliver stunning growth quarter after quarter over decades, there are bound to be speed breakers and it is a matter of great credit to the management that they have continued to do well in a tough half year. The sharp fall in the stock after the announcement of decent second quarter results highlights the limited upside surprise that Infosys or any top tier company can deliver due to an ever-increasing base, continued rupee appreciation and matching a near unrealistic consensus expectation which had been priced in before the company could announce its results.

There is no doubt that there is a strong tide against industry fortunes at the current time, with the risk of an imminent US slowdown, the withdrawal of STP benefits in six quarters and the runaway rupee all putting pressure on top and bottom lines. However, it is not the first time the industry has faced external pressure – the scars from the dotcom meltdown at the start of the decade have not disappeared! We all know what it takes to pull internal levers, build new customers with unique value propositions and farm existing customer partnerships at higher rates.

The opportunities for IT and BPO firms, both in India and overseas markets continue to be robust. With more and more firms moving towards package applications, the trend is shifting from custom-built applications development and maintenance to implementation and outsourced support of enterprise planning products with related opportunities to use emerging tools for optimizing multiple supply chains, managing the demand cycle and extracting business intelligence from every moment of truth in customer and stakeholder interactions.

Add to this the tremendous opportunities emerging for independent testing and remote infrastructure management and the IT basket looks full. In BPO, the track record in captives as well as third-party providers has been impeccable with multiple processes being transitioned offshore and the KPO hype becoming reality in a variety of sectors – retail and pharma and utilities adding to the tradition opportunities in financial services. New emerging opportunities in engineering services, embedded systems and outsourced product development will enable the acceleration of product development capabilities out of India as the architecting and design capabilities of the sector get strengthened.

The fact the it will not be “business as usual” is known to all sectors and tiers of the industry and the moves by individual firms and NASSCOM have already begun to show results as a mature industry braces itself to face what lies ahead and continue to demonstrate robust growth and profitability in the years to come. Will that translate into increasing market capitalisation? Time will tell!

The writer is Deputy Chairman & MD of Zensar Technologies