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R. Chandrasekhar is the president of the National Association of Software and Services Companies (NASSCOM), the premier trade body for the Indian IT-BPO sector. In this exclusive interview with 'India Global Business', the former Secretary in the Indian government's Department of Telecommunications delves into the trends in the industry, the future of robotics and how the Indian information technology sector can remain ahead of the curve. How can Indian IT firms move up the value chain There is a huge opportunity for transformation in India across sectors, with solutions around Internet of Things (IoT), machine-to-machine communication and automation of knowledge work. In order to ensure the continued growth of the industry, important steps need to be taken in this journey of transformation. Since traditional service providers and incumbents are getting disrupted, enterprises are opening up to the idea of new sourcing models, thus creating opportunities for new entrants. In the past, it would have been extremely difficult to break through such accounts as marketing efforts have shown previously. Companies are investing in building platforms and productised solutions to drive future growth opportunities. Priorities for the industry going forward will be verticalisation, automation, digital and cloud services, operational excellence and expanding global delivery models. How do you see robotics impacting job creation in the Indian IT sector The human resources landscape in India has evolved significantly over the last decade; be it in terms of identifying the right talent, training them to enhance their employability or creating access to a skilled talent pool of leaders who will enhance competitiveness across the industry. With changing technologies and a rise in requirement for a differentiated set of skills, industries are gradually expected to shift towards automation. This is expected to create a situation which could possibly result in a decline of hiring but also create an opportunity for re-skilling. NASSCOM believes that technology adoption will eventually lead to a creation of more jobs across sectors in the long run. Furthermore, automation will enable employees to upgrade their skills and allow companies to re-structure their processes in a cost effective manner. And as the skills performed by humans will become increasingly complex, the capacity of workers to master these new skills, along with the availability of talent, will become key drivers of competitiveness. Why have Indian companies failed to create a robust product development eco-system
Innovation is the defining value proposition for India's technology sector, driven by solutions built on digital technologies and start-ups, which are changing the paradigms of the product ecosystem. NASSCOM believes that the Indian software product industry is growing exponentially in terms of both revenue and people. The growth of the software product industry has advanced in recent years, signaling a transformation in India. NASSCOM has been actively supporting the ecosystem of emerging entrepreneurs and software product developers in the country through its Emerge Forum and NASSCOM Product Conclave (NPC), which are focused on different activities that can enable them to scale and grow their businesses. How serious is the problem of mid-level executives in Indian IT firms not having upgraded their technological skills The IT industry understands the need for re-skilling talent across levels; however, there is a need to understand that even as IT disrupts other industries, the IT industry is also being disrupted, so companies have to adjust and adapt to conditions and changing technology trends as we go forward. If the employees keep doing their work without constantly upgrading their skills, they become no better than the new wave of recruits that enter the companies every year. After a while, experienced employees who have not upgraded their skills make no sense cost-wise for companies as the same job can be executed by cheaper hands. It is imperative that employees and employers understand this need and work towards up-grading their skills. What would you say to young Indian engineering students who dream of becoming IT professionals Students need to understand that an engineering degree is no more enough for getting a job. Many job-seekers are qualified for the job, but not skilled; they require more skills that enhance domain specific expertise, soft skills as well as social skills. There is disruption taking place across the industry with an emphasis on moving away from quantity towards quality; with IT becoming an important horizontal across industries, employees need specific skills to service non-core tech sectors. What is your projection for the Indian IT sector over the short, medium and long terms India's IT-BPM industry is projected to grow 8.5 per cent in FY2016 - from $132 billion in FY2015 to $143 billion (excluding e-commerce), an addition of $11 billion. By 2020, the total revenue for India's IT-BPM sector is projected to reach $200-225 and between $350-400 billion by 2025. Digital technologies will continue to define the sector and revenue from these is likely to have a 23 per cent share by 2020 and more than 38 per cent by 2025. Indian service providers face a significant opportunity as digital technologies continue to be embedded in an ever widening range of products and services. Against the backdrop of sufficient cash reserves, do you think the time is ripe for Indian firms to bid for large US and European IT firms While we do not comment on the functioning of companies, it is imperative that companies keep acquiring new domain expertise, organically and inorganically, to stay ahead of the curve. How is NASSCOM planning to deal with increased protectionism in the West It is surprising that countries who always beseeched India to open up its markets are acting like iron clad economies when it is their turn to reciprocate. Whereas, India's IT sector has contributed $22.5 billion in taxes to the US government and generated 411,000 US jobs, including 300,000 for American citizens. NASSCOM has always reiterated the damage the protectionist attitude can cause to the IT collaborations between the East and West. Provisions penalising India-centric global IT services companies are highly illogical and irrational as they are being made to fund purely unrelated programs. NASSCOM has raised this issue at all levels and there is strong support from the Indian government, along with associations like, USIBC [US India Business Council] and the US India CEO Forum. We are gratified that the Indian government has moved the World Trade Organization (WTO) against the US plan to sharply increase the fees for work visas. How will the hike in the H1-B and L-1 visa fees by the US impact Indian companies As per NASSCOM's initial estimates, the financial implication of the H1-B visa on the Indian technology sector will be of the magnitude of around $400 million annually, which could adversely impact competitiveness in India's tech sector. The two-way flow of investments and intellectual talent is central to the growing commercial and strategic relationships between India and the US. Do you think Indian IT should try and increase its footprint beyond the US Though the US has always been one of the largest importers of the Indian talent pool and a partner in various collaborations, NASSCOM believes that due to the rate of development we are witnessing across the globe, Indian IT is looking at other regions for knowledge and talent partnership. Countries in Europe and other parts of the globe are looking at strategic partnerships to drive key IT services, providing important partnership opportunities to India. How will Brexit affect Indian IT companies NASSCOM considers Brexit as a phase of uncertainty in the near term but a mix of challenges and opportunities in the longer term. Being the second largest market for the Indian IT-BPM industry, constituting almost 30 per cent of the industry's export revenue of about $100 billion, the Europe market is of prime importance to India and the UK plays a key role within this market. Global IT will have to sustain the impact of Brexit and the Indian IT industry will have to wait and watch whether the effect will stay or not. The second quarter results will be able to provide a better picture on the industry performance, following which NASSCOM will evaluate the need for changes in the industry growth estimates. Why have Indian IT revenues remained flat for a while now The industry continues to see growth in revenues. This may be lower than industry's previous performance however the base of this growth is extremely broad. Having said that we live in interesting times with technology disruptions reshaping the enterprise space, and global and Indian companies focusing on building technology-led platforms that can redefine the delivery of solutions and services. In the context of these disruptions, the Indian IT BPM industry is at an inflection point expanding its capabilities around traditional and emerging markets, verticals, customer segments, global delivery presence and focus on high-value services.