IT and telecom in 2017: Disruptions ahead
- Under Rahul Gandhi’s leadership Congress to build alternative narrative : Chidambaram
- Not all banks to get capital support in first tranche
- DoT mulls allotment of backhaul spectrum through auction
- Civil aviation ministry may face funding crunch for UDAN
- Railways may shorten recruitment process from 2 years to 6 months
Reliance Jio Infocomm Ltd’s aggressive launch last year should certainly lead to consolidation among telecom companies. Two big disruptive technologies—bots and cloud computing—meanwhile pose an existential dilemma for India’s $150 billion outsourcing industry. 2017 should see a more aggressive push by domestic information technology (IT) firms in monetizing platforms, investments in newer technologies like GE Predix and blockchain, and more buyouts.
TRENDS TO WATCH
Indian telecom market will become bundled, just like in the West, thereby moving away from a la carte plans of voice and data.
In calendar year 2016, three of the five largest IT companies in India—Wipro Ltd, HCL Technologies Ltd and Tech Mahindra Ltd—together spent over $1.5 billion on acquisitions (Tata Consultancy Services Ltd and Infosys Ltd did not make a single buyout). 2017 should see a more aggressive merger and acquisition (M&A) streak. And Indian IT firms are likely to buy more boutique design firms and artificial intelligence companies.
More corporate venture funds and stronger partnerships with start-ups
The year should see more of the smaller IT firms (less than $400 million in revenue) set up corporate venture arms. The five largest companies could further strengthen their engagements with start-ups.
Battle for supremacy in era of industrial Internet
The battle between industrial conglomerates for promoting their cloud platforms like Predix (General Electric Co.), Sinalytics (Siemens AG) and Uniformance (Honeywell International Inc.) is a redux of the legacy war between enterprise resource application players SAP AG and Oracle Corp. Understandably, some home-grown system integrators will stand to benefit, like in the past when they built strong SAP and Oracle practices.
More quarters of net reduction in headcount
During the January-March period last year, for the first time in over two decades, two large companies, Wipro and HCL, reported a net decline in direct hiring while Tech Mahindra saw a decline in its existing workforce. This year will see more companies, over more quarters, holding back on hiring.
PEOPLE TO WATCH
Vishal Sikka, CEO, Infosys
Under Sikka, Infosys is expected to grow slower than the 9.1% dollar revenue growth recorded last year. Over the past year, Infosys has seen a string of executive departures, even as reports of some of the founders being unhappy with Sikka have emerged.
Rishad Premji, chief strategy officer and board member, Wipro
2016 saw Wipro embark on an aggressive M&A strategy. The strategy is overseen by Rishad Premji, son of chairman Azim Premji, and many believe that the company will eye further buyouts in 2017.
Abidali Neemuchwala, CEO, Wipro
Can Neemuchwala finally put Wipro back on the growth pedestal? Signs of Wipro coming up to industry-matching growth numbers should be visible this year.
Himanshu Kapania, MD, Idea Cellular Ltd
As the market matures, Idea is in a survival race. The company needs to take care of not just funding but management as well. It suffers the risk of slipping from the third position.
R.S. Sharma, chairman, Telecom Regulatory Authority of India
Around 20 consultation papers have been floated and there’s just over a year left for him to finalize action on them.
EVENTS TO WATCH
New CEO at TCS?
The troubles in the Tata group have led to many in the media speculating that TCS CEO Natarajan Chandrasekaran may become the next chairman of Tata Sons Ltd, the group holding company. If it transpires, TCS will get a new CEO.
In telecom, competition disrupted the market last year. This year, technology will lead the change and disrupt the market. Core revenue will suffer more because of advanced technologies rather than just competition. Significantly, a drop to three-four companies in the fray from the current seven-eight companies should imply the last leg of consolidation.
Wi-fi and bots
Wi-fi and public wi-fi will scale up in 2017 as India moves towards greater data dependency. In IT, an aggressive embrace of automation by companies should be the highlight, as more engineers get replaced with bots. Between Infosys and Wipro, over 10,000 employees were redeployed (and a few let go) in newer projects as companies replaced engineers with automation platforms to do repeatable tasks.
Amid protectionist rhetoric, IT firms will keep an eye on the changes in visa rules that US President-elect Donald Trump is likely to announce.
IT companies are expected to start disclosing revenue from individual components like cloud which comprises digital. Sometime in financial year 2017-18, Wipro is expected to start disclosing business generated from cloud technologies, becoming the first Indian firm to join the ranks of companies like Accenture Plc. and International Business Machines Corp. This is important as it will reflect how Indian companies are embracing newer technologies.