A Sunset & a Sunrise for IT Industry | LikeWike
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A Sunset & a Sunrise for IT Industry

A slew of new MNCs are looking at India while old ones are scaling up their presence. Last year, Apple Inc set up an R&D centre in Hyderabad which will eventually employ 4,000 people and work on Apple Maps. Many like Google, LinkedIn, Uber, GroupOn, Facebook, Rubrik have built or are building their R&D campuses in India, in most cases their largest outside of the US.

A chunk of India’s $150-billion IT industry, which contributes over 9% to GDP and employs close to 4 million people, is under threat. Built on cost arbitrage in the 1990s, their business model is facing challenges. Digital disruption and new technologies like cloud computing, artificial intelligence (AI), IoT (internet of Things) and big data are the new buzzwords. A report by consulting firm Bain & Co says that IT budgets are shifting towards digital technologies, from 20% till recently to as much as 45% today. Unsurprisingly, from 14% of the revenues today Nasscom expects digital-led businesses to bring 60% of the IT industry’s revenue by 2025.

It is in this context that green shoots of GICs and their potential hold significance. GICs — a subset of the IT industry and earlier called captives — have been around since the 1990s with MNCs like GE, American Express and Texas Instruments as pioneers. Perhaps low-profile by choice, they were often overshadowed by the media-savvy outsourcing giants like Infosys and TCS and their dazzling year on year growth of up to 40% in the go-go years. The trend has now reversed, what with IT outsourcing slowing down, and the staid and steady GIC growth — between 2005 and 2016, 711 new GICS were setup — looks impressive. More importantly, they hold out hope for an industry staring at its sunset.

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