The topmost software service providers those are operating in India have added 24,047 people in the first fiscal, compared with the 13,772 net additions in the previous monetary thereby leading most of the experts to believe that the industry is planning to record the fastest growth in the upcoming three years.
The turnaround in the speed of hiring at cognizant Technology Solutions Corp., Tata Consultancy Services Ltd, HCL Technologies, Infosys Ltd, Wipro Ltd in the one fourth year of lukewarm employee additions, the slowest speed since the offshore outsourcing the boom started at the turn of the century.
The analysts attribute the reversal of the fortunes for the sector for three reasons. Firstly, the companies look to spend more on the outsourcing technology work. secondly, the Fortune 1000 companies make use of data analytics platforms those are offered by the information technology vendors for running their business in more better way. Thirdly, the companies are raising their spending’s on the digital technologies. The raised spending has led to more contracts valued at more than $1 billion.
ALSO READ: Samsung Galaxy Note 9 beats iPhone X
In this situation, the Mumbai based TCS has achieved three various mega deals since December there by carrying in a combined $5.6 billion in the revenue. In the previous week, the Bangalore based Wipro has also won its biggest contract which valued $1.6 billion.
“The early legs of any transformation are always challenging, and this we have seen in the last two years when all companies struggled for growth,” an executive at Cognizant said on condition of anonymity. “For all the five companies, digital is now a fourth of total revenue. So, without getting into the debate of digital definition, the heartening thing is that quality of revenue is only improving.”
Albeit, all the IT firms are moving away from the people-led model to a platform-based business approach, hiring by the largest IT firms continues to be a dominant indicator of their prospects. The five firms together employed 1.17 million at the end of the June quarter.
“Growth is back,” a senior executive at TCS said on condition of anonymity. “Companies were always spending more on digital in the past. But now, what we are seeing is that if the traditional business can be done efficiently and if you have solution offerings like data analytics and AI (artificial intelligence) platforms, you will be able to differentiate from others.”
“To us (TCS), the question of digital offsetting the loss in traditional is not relevant because there is enough and more work available and hiring is just one indicator,” said the executive cited above. The June quarter net additions of the five firms is the highest in at least two years. They added 26,565 people to their workforce in the three months ended 30 June 2016.
Although TCS does not provide a growth outlook, it is expected to cross 10% growth this fiscal. It managed an 8.6% dollar revenue growth to end last year with $19.09 billion in revenue. Ditto for Wipro, which ended last year with $8.06 billion in revenue. It expects to get at least $80 million or 1% growth this fiscal from the $1.6 billion contract.
“I’m not sure with this ‘little upswing’ we are seeing but the mood is definitely more bullish over the last couple of months,” said Phil Fersht, chief executive officer of US-based HfS Research, an outsourcing research firm. His caution finds support from some industry executives.
“The biggest downside risk to this growth story is the uncertainty in the many of the first-of-its kind of projects,” said the Cognizant executive cited before. “The work in areas like IP (intellectual property) platforms runs the risk of IP infringement cases. You are offering data analytics solutions when debate on data privacy is gaining traction. The promised benefits from automation will be tested. So, any incidental issue and this can blow up, making many clients hold back on spending in these areas.”
ALSO READ: Models, Specifications and Information of iPhones Leaked
