IT industry bracing up for new challenges and opportunities

Updated on: Wednesday, October 27, 2010

Indian IT industry might need to shore up local presence to serve clients to overcome the anti-offshoring wave, but as of now the low cost of services provided by it is its only key advantage, Infosys CEO and MD Kris Gopalakrishnan.

The anti-shoring wave would be a challenge and could be dealt with by addressing it from the outside and by adapting internally, through innovation. Increasing local presence could also be one of the solutions, he said at the Knowledge Summit organised by the All India Management Association.

On whether India would retain the cost advantage, he said: "Cost is only one of the advantage we provide". Much would depend on flexibility to scale up and down and use resources in times where contract cycles are of shorter duration."

More than half of Indian IT industry's revenue comes from offshore work, but off-late stiff resistance has been building up in the US to shipping out American jobs.

The IT and ITes accounts for around 10 per cent of the country's over USD 500 billion services sector.

He said India would have to continue to provide the advantage of world class quality and talented resource, if it had to sustain the growth in the indutry.

"Focus on all the advantages we have. Cost could be a way to attract a company to test a model but to continue you have to have other advantagaes", he said.

Later talking to reporters, he said "client confidence was already lower in Europe than the US. Europe has been slower in recovery."

He said the global IT budget for 2011 would range from being flat to slightly positive.

At the conference, Gopalakrishnan said the "industry will continue to be resilient and innovative."

Cloud computing would enable small companies compete with big companies by enabling them leverage the infrastructure from the cloud, at lower cost and ensure greater reach to customers through the internet.

India would benefit from emergence of new competitiors. Existing companies will adopt to new competition, he said.

On the IT scenario, he said the industry was coming out of recession and results of two IT major companies was a positive indication.

He said 50 per cent of new jobs in seven urban areas was directly or indirectly connected to the IT industry. He said nearly 1.2 to 1.7 lakh new recruitments from colleges is expected to take place in 12 months with Infosys itself expected to take in 25,000 in the next 12 months.

IT industry bracing up for new challenges and opportunities

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