US President Joe Biden has announced a major initiative to make American industry more competitive. This is expected to generate a wave of fresh IT spending in emerging technologies like cloud, AI, IoT, among others and open up large business opportunities for the likes of TCS, Infosys, HCL Tech.
India’s IT sector, which clocked a 2.3 per cent revenue growth to $194 billion in 2020-21, could be in for a mega growth cycle over the next five years as a result of a structural shift in demand from US companies that are expected to increasingly adopt new technologies like cloud, artificial intelligence (AI) and internet of things (IoT).
Last Friday, the Joe Biden administration issued an executive order listing “72 initiatives by more than a dozen federal agencies to promptly tackle some of the most pressing competition problems across our economy. Once implemented, these initiatives will result in concrete improvements to people’s lives,” the White House website said.
These initiatives are expected to lead to a wholesale digital transformation of American businesses and lead to great opportunities for India’s IT services companies.
The new initiative will greatly increase competition in the US economy by, among other things “Make it easier to change jobs and help raise wages by banning or limiting non-compete agreements and unnecessary, cumbersome occupational licensing requirements that impede economic mobility”.
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It will also “Save Americans money on their internet bills by banning excessive early termination fees, requiring clear disclosure of plan costs to facilitate comparison shopping, and ending landlord exclusivity arrangements that stick tenants with only a single internet option”.
Then, it also makes “it easier and cheaper to switch banks by requiring banks to allow customers to take their financial transaction data with them to a competitor”.
“The latest direction from the US administration adds to the growing backlog of digital transformation projects in the marketplace. This bodes well for the Indian IT industry and will further accelerate an already hot market for them,” Peter Bendor-Samuel, CEO of Everest Group, a US-based IT advisory and research firm, was quoted as saying in ET, one of India’s leading financial dailies.
“We believe that the market is at the start of a five-year mega cycle as digital transformation and modernisation move into its scaling phase,” he added.
After years of posting anaemic growth rates as they struggled to keep pace with changes in the global technology scenario, the Indian IT sector, led by behemoths such as TCS, Infosys, HCL Systems and Wipro, among dozens of others, is expecting to return to the high growth path from this year as the Covid-19 pandemic accelerates technology adoption by companies across sectors in the US, their main market as well as in Europe and India.
There is an acute shortage of domain experts in the US in new emerging technologies. According to an analysis by the National Foundation of American Policy (NFAP), a leading US-based non-profit, non-partisan organisation dedicated to public policy research on trade, immigration, and other issues of national importance, based on data from EMSI Job Posting Analytics, there were more than one million job vacancies in computer-related positions in the US as on March 7, 2021. This marked a 12 per cent increase from the figure a year ago.
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Indian IT services companies are ideally placed to fill this skills deficit. “There's nowhere else in the world that you will get such phenomenal talent and the scale that you will get in India. If somebody says that Indian talent is becoming more expensive and salaries are higher than Poland and Eastern Europe, I will be very surprised,” TCS Chief Operating Officer N.G. Subramanian told the media.
Much before Biden’s new initiative, Nasscom, the apex body of the Indian IT industry, and McKinsey & Co., a leading global consultancy firm, had forecast that India’s IT sector could touch revenues of $300-350 billion by 2025 if it could meet the emerging demand for services related to the cloud, AI, cybersecurity, etc.
The report titled “Future of Technology Services – Winning in this Decade” released earlier this year had said this will require close collaboration between the private sector, the government and academia.
“The Indian technology services sector can utilise the potential of deep technologies like cloud, artificial intelligence, machine learning, Internet of Things, etc. through effective transformational practices, thereby contributing to the overall economy in the coming decade,” Debjani Ghosh, President, Nasscom, had said at the time.
“The government needs to encourage and support digital literacy and skilling to ensure its talent, energy, imagination, knowledge, and unmatched commitment unite to address the customers’ surging needs. It is equally vital for India to reach a new level of cooperation to continue the remarkable growth observed in the sector,” she had added.