Long-term growth for large Indian IT companies should not be in doubt. The demand for IT services continues to be strong. Consistent double-digit growth over the past decades is a testament to the rising demand. Automation is now integral to nearly all processes. The capabilities to train and skill people to acquire new skills are limited. India is one of the countries that has succeeded in building an IT skilling and training infrastructure that can about manage this demand.

I joined Tata Consultancy Services in 2000. I think we were just under 10000 professionals in the company then. Today they are 500,000 strong, and the numbers are rising. Deal sizes today with the Indian IT majors now go into their billions. These statistics indicate the ability to achieve long-term growth by these companies. You see a similar pattern in the Infosys case, another example of long-term growth.

The Indian IT company’s business models have hardly undergone any change. They have been proven to be robust and effective in sustaining long-term growth for these companies. These corporations continue to be skilled resource suppliers to the ever-increasing IT needs of the world. Look around the world, and you will notice that with each new technology, the need for IT manpower rises. The Indian outsourcers have perfected the technique of retraining existing manpower on newer technologies deployed to fulfill customer demand.

Long-term growth is sustained by keeping manpower costs down. It is done by continually hiring fresh resources. These companies have a well-oiled recruitment engine that keeps inducting new resources to these companies. Manpower that is unable or unwilling to re-train is let go. It explains the high attrition rates seen in these companies.

IT solutions are deployed as cost reduction and efficiency improvement measures in a recession. In times of growth, automation is used to maintain and keep pace with production. Growth is cyclical, going through a cycle of boom and bust. Companies often use technology to improve operational efficiency. It helps them keep costs down and tide a downturn.

I do not envisage the situation changing over the coming decades. Companies like TCS and others will continue to clock long-term growth. Staffing needs will rise, and these companies’ size and revenues will continue to grow consistently.

The companies will keep talking about going up the value chain but make no change to their business model. And why should they? The existing models are doing great for them.

Startups are betting on the domestic consumption of India. With the rise in incomes, this segment will continue to grow exponentially. These will operate on an online-offline model. The talent pool available in the country can easily meet the startup IT skill requirements.

As gross capital formation shifts in favor of the private sector in India (Today, it is still abysmally small, around 22 percent), the economy may start feeling the need to develop innovative solutions. It is then that a new cycle of higher-skilled people will emerge. It is these changes that will drive change in the IT landscape of India.

The current IT companies will continue to service the needs of the global economy. The emerging domestic-driven startups will be the harbinger of change in the IT landscape of the country. I think this may happen in a decade. But long-term growth of the large Indian IT outsourcers will continue.

Credentials:

Business strategy

Business model innovation

Marketing strategy

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Sudhirahluwalia, Inc