Will India's dominance in the IT sector continue?

Will India's dominance in the IT sector continue? (by Nishant Kumar)

Will India's dominance in the IT sector continue?

India is a well known IT destination in the world with largest number of IT professionals living here. Our increased operational efficiencies have been helping us dominate this sector. India is world's most cost-competitive sourcing destination and many of India's top cities are still cheaper than other low-cost destinations.

The $150 billion industry has been experiencing export revenue growth of 7-8% currently with domestic market projected to grow at 10-11%. The industry is expected to gain momentum with the rising demand of financial services and digital businesses.

Despite strong backdrops, the questions have always been raised if the era of India's dominance in the IT sector will continue.

There are innumerable challenges in the path towards higher growth. Indian IT industry has faced many formidable challenges in the past as well, be it transition to Y2K, global financial crisis and it has always had the last laugh.

There are many issues and barriers ahead, let us discuss uncertainties and opportunities that are lying ahead in future for IT sector.

Automation

There is a drastic shift happening in the technology arena due to automation and AI that has created uncertainties in the mind of many who think that such development would eat many jobs. Automation is a reason for scarcity of jobs in certain areas, but emergence of new technologies such as cloud computing, cyber security, big data etc. have also brought many opportunities. So, it is just a temporary turbulence and to cater to the changing technology needs, companies have already started re-skilling their employees.

H-1B visa

IT industry is already facing pressure on margins and visa woes are adding further wariness. US administration is thinking to raise salaries paid to H1-B visa holders. Such a move will aggravate costs and dent margins in huge way. As of now, there is no change in status quo but it will remain so in future is a big question.

Though there will be continuation of challenges, Indian IT will continue to grow at a robust rate owing to increased local demand for IT product. India’s digital businesses have been flourishing and employing many directly and indirectly.

Surge of Philippines, China and Ireland

Global companies are also tapping other countries like the Philippines, China and Ireland for low-cost labour and talent. Many think that these new entrants can eat major chunk of our businesses.

These countries are picking up in certain areas like China has its major investment in hardware and gaming area. Philippines are majorly in BPO. So our forte in software services will still be unaffected.

Rising cost of labour

With increased efficiency, the labour cost has gone up but we are still lower than many low cost countries. And we shouldn’t forget that labour costs have been rising across many rival nations too. This factor is no more an issue for IT industry.

Lack of indigenous product

It’s time now to deliver an Indian IT product in world market. A lot of people think that India is vastly a service economy and incapable in the area of product development. But nobody can deny the fact that our professionals have been working heavily on many coveted products in various companies like Microsoft, Apple, Google etc.

Time is changing and we are shifting our focus from service to product. Many research works are now based in India. Start-ups are working dayin and dayout on numerous ideas. The future will see many milestones in the area of product development and unveil many world class products.

Despite challenges, Indian IT industry will overpower all odds and emerge winner.

-Nishant Kumar
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