The Indian Information Technology (IT) services industry, which has been through a roller coaster ride since the 2008 financial crisis hit it hard, is transitioning to the digital age for growth given the strategic position in which technology companies are placed in the IT spectrum. Infosys, for example, which had been through a few troughs in the recent past, is on a turnaround under the leadership of Vishal Sikka, its Chief Executive Officer (CEO) and Managing Director (MD). With his strategy of ‘Renew and new,’ the bellwether is now focusing on digital technologies. Optimism seems to be high given the opportunities in digital technologies that IT companies are best placed to exploit. The ability to visualise uses for new digital technologies combined with execution capability is driving opportunities for the industry.
“In the current digital business front, the sourcing model is changing. Clients are looking at IT services firms as partners with whom they can work and can do more co-discovery, co-sourcing and co-innovation,” said, Vice President, Gartner.
Consulting
Gordon Coburn, President, Cognizant, recently told The Hindu that the company’s combination of investment in consultants and the retraining of its employees in digital technologies is bearing fruit now. Consultants help clients understand what technology can do for them and as to how a technology vendor can help implement the same. Retrained employees from the technical teams help execute the project, typically. Clients find this attractive since their technology investments in the past and returns from them have reached a plateau. The only way for some of these large spenders to move forward is to devise dramatically new ways to engage their own end-users. In today’s economic environment, cutting costs is as critical as enabling new revenue. “Clients want savings from the way they run their business and then use those savings to invest in new ways to change their business”.
Digital spend
According to Gartner, of the total IT spend of about $ 3.54 trillion in 2016, IT services is expected to be about $929 billion, fuelled by digital technologies. Digital technologies are certainly more mainstream today than five years ago. But they still do not account for a major portion of IT services revenue, yet. For TCS, in the last fiscal, digital revenues grew 52.2 per cent due to faster adoption of digital solutions. Infosys is concentrating on digital solutions through its platform business. The company has announced an ambitious plan of achieving $20 billion revenue by 2020 of which $2 billion would be from ‘next generation’ services. Under the new leadership of, a billionaire -promoted Wipro has also embarked on a new journey equipped with six themes, including digital. “Our vision of the digital business across advisory, design and technology is securing mindshare amongst existing and new customers. We believe consulting capabilities in business and IT strategy, functional and process excellence are critical to the advisory offering in digital,” said CEO Wipro.
Changes
HfS Research, an analyst firm, said in February it came across about 56 large outsourcing deals of which over 50 per cent are in the digital arena, including social, mobility, analytics, cloud, automation, security and IoT. The percentage of digital deals stood between 30 per cent and 40 per cent during the period between September and November 2015. But in the last three months, it has risen over the 40 per cent mark, the report said.
A Senior Analyst - Large Enterprise Services, Ovum, a research organisation, said, “There is surely a lot of work being put out on the market. We have witnessed an increase in contract activity. Major markets like North America and Europe (U.K., Nordics, Germany) are showing an increase in the number of contracts coming up for renewal as well as new contracts coming to market.”
With new technologies, niche players get an opportunity to gain experience. Large outsourcing companies lacking in expertise may need to either partner or acquire specialised players. Now, ‘acquihire’, or buyout of a company for skills of its staff is also gaining ground. Infosys’ acquisition of Panaya and Skava, Wipro’s buyout of Designit, Mindtree buying Magnet 360 and Cognizant buying US-based KBACE Technologies are examples. Funding start-ups, both external and internal, is gaining acceptance as giants value a nimble-footed culture. “We will see more collaboration between larger companies and start-ups that address niche needs,” said Senior Director, Financial Advisory, Deloitte.
Q.1. What according to Gartner, is IT services expected?
(1) It is expected to be about $3.54 billion, fuelled by digital technologies.
(2) It is expected to be about $299 billion, fuelled by digital technologies.
(3) It is expected to be about $929 billion, fuelled by digital technologies.
(4) It is expected to be about $929 billion, but not fuelled by digital technologies.
(5) It is expected to be about $929 billion, fuelled by digital technologies.
Explanation- Answer lies in the 4th paragraph.
Q.2. Which of the following statement/s is/are NOT TRUE in context to the passage?
(A) Wipro’s buyout of Designit, Mindtree buying Magnet 360 and Cognizant buying US-based KBACE Technologies are examples.
(B) In the current digital business front, the sourcing model is changing.
(C) With new technologies, niche players get an opportunity to gain experience.
(1) Only A
(2) Only B and C
(3) Only A and B
(4) All of the above
(5) None of the above
Q.3. What may large outsourcing companies lacking in expertise need?
(1) They may need either partner or acquire specialised players.
(2) They may need more and more money to invest.
(3) They may need neither partner nor acquire specialised players.
(4) They may need man power and money power to reach at the top
(5) They may need nothing as they are already capable.
Explanation- Answer lies at the last paragraph.
Q.4. Which of the following statement/s is/are TRUE in context to the passage?
(A) Funding start-ups, both external and internal, is gaining acceptance as giants value a nimble-footed culture.
(B) The Indian Information Technology services industry is transitioning to the digital age for growth given the strategic position.
(C) With his strategy of ‘Renew and new,’ the bellwether is now focusing on digital technologies.
(1) Only A and B
(2) Only B and C
(3) All of the above
(4) Only A and C
(5) Only B
Q.5. According to the passage, what are major markets like North America and Europe showing?
(A) They are showing an increase in the number of contracts coming up for renewal.
(B) They are showing new contracts coming to market.
(C) They are showing expenditure for their company.
(1) Only A
(2) Only B
(3) Only C
(4) Only A and B
(5) Only A and C
Explanation- Answer lies at the 2nd last paragraph.
Q.6. Which of the following is possibly the most appropriate TITLE for the passage?
(1) Technology mindshare amongst existing customers
(2) Age of the digital dawns on Indian IT industry
(3) Infosys and its achievement
(4) Use of technology in the world
(5) Digital technology and its difficulty
Q.7- How do consultants help clients?
(A) Consultants help clients understand what technology can do for them.
(B) Consultants help clients to take risk to be successful in life.
(C) Consultants help clients understand how a technology vendor can help implement it.
(1) Only B and C
(2) Only A
(3) Only A and C
(4) Only B
(5) All of the above
Q.8- How do retrained employees from the technical teams help?
(1) They help large spenders to move forward.
(2) They help needy people.
(3) They help execute the project typically.
(4) They help those people who help them.
(5) They help manage all the situation in every circumstance.
Q.9-10. Choose the word/group of words is most SIMILAR in meaning to the word/group of words printed in bold as used in the passage.
Q.9. EXCELLENCE
(1) Inferiority (2) mediocrity (3) brilliance (4) huge (5) manage
Q.10. EXECUTE
(1) Implement (2) support (3) create (4) forage (5) haggard
ANSWER
1. (3) 2. (5) 3. (1) 4. (3) 5. (4) 6. (2) 7. (3) 8. (3) 9. (3) 10. (1)
