IT Industry: Expect a return to double-digit growth levels in 2019

By January 2, 2019Articles
Startups,Digital Transformation,AI, Artificial Intelligence, Automation

Predicting the Indian IT outlook for 2018, I had written that the tightening of the visa regime and the surge in Artificial Intelligence (AI) and automation would pose challenges for the sector while the manifold increase in customers embracing digital transformation will be a growing opportunity for smart companies who are able to embrace new agile development methodologies and partner clients in the transition. I had mentioned that the opportunities for industry players would be to continue to strengthen digital transformation capabilities and invest in toolsets products and platforms which enhance the ability to provide everything—software, infrastructure, platforms and business process management as a service. Like all soothsayers who occasionally get a prediction right, I can gloat in saying “I told you so” and do some fresh crystal ball gazing for 2019.

Most companies, notably TCS in the top tier and Mindtree in the mid-tier, have shown that they have what it takes to turn digital champions, and others such as Infosys and Zensar are rediscovering their mojo while a few are lagging behind because of an over-reliance on ageing business models in application and infrastructure management, testing and traditional BPO. In 2019, one can fully expect a return to the double-digit growth levels for the industry, with some of the nimbler ones eyeing the golden growth numbers of digital industry leader Globant Inc and aspiring to a 20%-level growth again, albeit with some help from judicious acquisitions. In doing so, I believe the winners will be those who focus on new customer and employee journeys, invest heavily in design thinking, customer and employee behaviour forecasting, user experience optimisation and of course, AI and automation injection in every process to optimise both cost and outcomes in the service delivery process.

The lead in the last area, with voice bots and substantial investments in machine learning to enable predictive and prescriptive analytics is not surprisingly being taken by enterprising business process management players such as WNS whose growth numbers have been simply off the charts in recent times. Staying one step ahead of customers and employees and delighting them through prediction and recognition of even their unstated demands is what will differentiate the winners from the also-rans.

Related segments—e-commerce, engineering design, product outsourcing are all likely to grow at a steady, if somewhat, sedate clip and the real breakaways can be expected from platform creators who enable all participants in an ecosystem—customers, supply chain partners and employees to plan their own journeys, provide them real-time information and skills to navigate the new hurdles on the journey and enable AI help at every stage to make the purchasing, partnering or reskilling process as seamless as technology can make possible. This is an area which will see not only big investments from large companies but also visionary start-ups and well-funded entrepreneurs with deep knowledge of the chosen domain to build success. One of the companies in our own 5F World eco-system, Skills Alpha has built a path breaking AI enabled platform that facilitates career planning, skilling, peer learning and mentor management through a digital journey. The company established successful product-market connect in 2018 and is poised in 2019 to enter the US and European markets with tripling of revenues and quadrupling of profits every year for the foreseeable future.

McKinsey Global Institute had pointed out that in the next few years, while the core industry revenues can scale to a $250 million level by 2025, a much larger opportunity will exist by then in electronics manufacturing, e-commerce and digital payments and new and emerging digital eco-systems including enabling the shared economy to grow and thrive. Established players and new entrants who harness the cyber-physical opportunities in Industry 4.0 manufacturing and logistics, healthcare, agriculture and energy, mobility and transportation system, e-governance and education will all scale in India. The only concern that I can see for 2019 is the absence of job creation in the country as well as in the IT sector at a pace that is anywhere near the optimum. We will have to look to the social sector and also IT players addressing Indian opportunities to rebuild employment potential for the future!