IT firms eye eventful 2014 as SMAC, demand optimism beckon
Year 2014 promises to be bigger and better than the last two years, which were marked by bloodbath in global markets due to Eurozone crisis and falling consumer confidence in the US
New Delhi: Braving the ‘new normal’ of currency fluctuations and global economic challenges, the USD 108 billion Indian IT-BPM sector is looking at upsides as improving US and European markets and disruptive technologies propel business confidence and client spending.
Year 2014 promises to be bigger and better than the last two years, which were marked by bloodbath in global markets due to Eurozone crisis and falling consumer confidence in the US. Demand is set to pick up in sectors like BFSI, healthcare, retail and transportation globally in the year ahead.
However, the changing regulatory environment in certain geographies like the US, Canada and Australia could play spoilsport for information technology and business process management (IT-BPM) firms as they face mounting operational expenses, which can further pinch their margins.
Besides, the upcoming Lok Sabha elections in India next year could delay the government’s IT spending, which is expected to touch about USD 6.4 billion in the ongoing year.
“2014-15 is going to be better that 2013-14, which was better than 2012-13. It will be good for us as well as the industry,” India’s largest software services exporter Tata Consultancy Services CEO and MD N Chandrasekaran told PTI in an interview.
He stated that four “powerful” technologies are transforming the industry. “SMAC is throwing up huge opportunities as firms want to optimize investments in current technology and drive growth by using digital technologies and platforms. The digital forces of social, mobile, analytics and cloud (SMAC) will reach mainstream status in 2014 and create requirements, drive new purchasing and establish new competitive realities,” he said.
According to the Indian Brand Equity Foundation (IBEF), Indian IT vendors are expected to generate USD 225 billion from SMAC-related revenue by 2020 of the USD 1 trillion global opportunity.
Cloud represents the largest opportunity under SMAC, increasing at a CAGR of about 30 per cent to USD 650–700 billion by 2020, followed by social media, which will offer a USD 250 billion market opportunity by 2020.
“2013 marked a year of innovation and transformation for the sector. New business models emerged to attract and retain customers and align to changing business dynamics,” Frost & Sullivan Head Consulting (ICT Practice) Nishchal Khorana said.
Increasing adoption of cloud computing has pushed Indian IT players to devise the core value propositions and delivery models, he added.
Mobility, analytics and social media created new revenue opportunities and business lines to create differentiation in the market.
Indian IT services as well as product companies invested significantly in developing centres of excellence to showcase capabilities, building skill set and marketing initiatives to ride the next wave of growth.
IT vendors continued to expand their presence across markets like Latin America, South East Asia and Eastern European countries, which offers not only access to low-cost labor and also the opportunity to tap new virgin markets, thus further mitigating risks of adverse regulatory impacts.