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Business News/ Companies / New verticals to drive IT growth
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New verticals to drive IT growth

New verticals to drive IT growth

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Mumbai: The demand for information technology services hasn’t reduced because of the global slowdown and European debt crisis but is instead shifting to emerging industry verticals, according to company executives and researchers.

“It (demand) isn’t shrinking. It’s just different and it’s all in the nuances. There will be no complete recovery until 2015, but it’s not stagnant either," Helen Huntley, vice-president at IT consulting firm Gartner Research said on the second day of the three-day Nasscom India Leadership Forum.

Global IT services spending grew at a compounded annual growth rate of 6.3% in 2001-2008, but will only grow at 4.4% in 2009-2015, according to Gartner.

The consulting firm has projected that worldwide IT spending will grow at 3.7% in 2012 to $3.8 billion, slowing from the 6.9% growth seen in 2011.

Consultant Deloitte’s global technology leader Bill Allison mirrored Huntley’s views saying clients still swore by the “better, cheaper, faster" mantra and while the market isn’t going away, it is innovating at the edges.

R. Chandrasekaran, president and managing director for global delivery at Cognizant Technology Solutions Corp., said despite concerns of gloom and doom, his firm was taking a contrarian view. “We think the market is in good shape and we’re on good track to beat the $225 billion revenue projection by 2020," he said, adding that all data point to cost pressures within companies which will drive the demand for offshore services.

He said changing regulations in both the banking and financial services sector and the pharmaceuticals industry would open up opportunities for services companies, with technology now driving business transformation.

The Nasdaq-listed firm last week forecast a 23% growth in revenue for 2012—higher than the 11-14% export revenue growth for the industry projected by Nasscom.

Another area where demand is changing is through emerging geographies, with demand moving eastwards, said Chandrasekaran, adding solutions developed for emerging markets could then be exported to developed markets.

His namesake, N. Chandrasekaran, chief executive and managing director of Tata Consultancy Services Ltd, said global clients are much better prepared than they were during the downturn in 2008.

“Every company has an efficiency agenda and a growth agenda. The profits of S&P 500 companies is much better than in 2008; there is drive towards compliance and innovation; so there are many opportunities," he said.

He said India’s largest IT services company by revenue was not seeing any delays in either deal closures or budget closures and, in fact, had a healthy pipeline. Yet, the industry will have to continue grappling with challenges in the form of the overall mood and the high rejection rates for H1B visas to the US, Chandrasekaran said.

john.k@livemint.com

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Published: 15 Feb 2012, 08:57 PM IST
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