IT industry to infuse big buck in automation, AI in 2019; faces threats from data curbs, rising protectionism
For the industry body National Association of Software and Services Companies (NASSCOM), 2018 has been the year of ‘Digital at Scale’ as IT firms focussed on leveraging new technologies and ensuring sustainability by creating right skills with help from innovation, policies and partnerships.
The year ahead is “punctuated with several transformative opportunities”, NASSCOM president Debjani Ghosh said.
The industry body has projected exports to grow at 7-9 percent for 2018-19, almost same as the previous fiscal, but domestic revenue may grow faster at 10-12 percent and this may make the new year transformative with overseas funds accounting for a lion’s share so far.
Over years, the industry has graduated from being the back office of the world to being at the forefront of change, helping clients optimise operations and stay ahead of competition.
Protectionist stances are being seen across key markets — be it the US, the UK or Australia — with governments bringing in more stringent regulations around procurement of work visas. As a counter, Indian IT firms are ramping up their local presence abroad by hiring locals.
Ghosh said rising protectionism continues to be an irritant and the anti-immigration rhetoric discriminatorily targets Indian companies and challenges the level playing field for business delivery.
The companies, however, are upbeat on opportunities.
Cyient executive chairman BVR Mohan Reddy said the Indian technology industry’s business model has moved away from cost-arbitrage to solution provisioning and value creation. He exuded confidence that visa issues will not be a concern for a sustained growth of the industry.
Mindtree CEO Rostow Ravanan said his company is closely watching international issues and is geared up to deal with this dynamic scenario through greater local hiring and other measures.
“Our approach would be locate tasks in the geography based on the best interests of our clients,” he said. Mindtree is also focussed on “imagining what is ‘Beyond Digital’ and making investments to prepare for the future”.
One of the biggest developments in 2018 was implementation of the GDPR (General Data Protection Regulation) in the European Union (EU) in May. It aims to strengthen and protect data of individuals in the region, while the norms also stipulate heavy penalties for non-compliance by companies.
For some, this is also being seen as an opportunity.
According to Microsoft India president Anant Maheshwari, this gave India an opportunity to build expertise and capabilities, create new lines of advisory and consulting businesses, develop a market differentiator and be a source of competitiveness for customers in EU.
Back home, India is developing its own set of data protection rules, which would deal with consent, definition of personal and sensitive data, possible exemptions, grounds for processing data, storage restrictions for personal data, individual rights and the right to be forgotten.
Apart from penalties, the proposed rules also restrict cross-border transfer of personal data – a clause that has irked many international tech companies as they would be required to host sensitive data like financial information in local servers.
An HCL Technologies spokesperson said the GDPR rollout and other such regulations have had global enterprises rushing to assess their compliance and are working towards aligning their policies and controls.
“Escalating threat landscape with a spate of high profile breaches and increase focus on regulations have ensured that the cyber security and governance risk and compliance services are much sought after,” the spokesperson added.
One of the big milestones for the Indian IT sector this year was Tata Consultancy Services (TCS) crossing the $100 billion market valuation mark.
For Infosys, 2018 was a year of stabilisation after a long turmoil. The new CEO Salil Parekh has charted a three-year transformation strategy — year one will focus on stabilising the company, while the next two years will be about gaining momentum and accelerating growth, respectively.
The Bengaluru-based company is moving ahead with its plan to hire 10,000 locals in the US and is betting big on digital, like its peers. It expects areas like AI, Internet of Things, Blockchain and cybersecurity to be key trends in 2019.
A recent TeamLease survey said Indian IT sector is geared up to add around 250,000 new jobs in 2019. Automation, AI and robotics are expected to reshape workplace culture and skill requirements with big data analytics, machine learning and AI developers are turning out to be the highest paid areas.
“With bots taking up more mundane tasks, employees are pushed to think ‘value’ even more – and this has given rise to a set of different skill sets that are required in business as of today,” Genpact CHRO Piyush Mehta said.
He cited the example of an AI ethicist, a role that is picking up fast but did not exist five years back.
Reddy said AI could make some jobs redundant in the short-term, but it has very high potential to create new jobs.
Mehta said there is also a massive untapped workforce in the non-IT sectors such as healthcare, banking or manufacturing.
According to NASSCOM, over 1,200 new advanced technology startups got added to the ecosystem in 2018 with data analytics being the largest contributor and the startup momentum will continue in 2019.
The debate on whether AI will create jobs or take away more roles remains open, but the industry is hoping for bigger deals, stronger growth and better margins in the new year.