Information technology firms are steadily increasing their volume of delivery centers, as global demand for digital services continues to rise.
Infosys, India’s second largest software exporter this year, has set a bet for graduates who are given campus offers. A graduate is asked to pick a paid course on front-end development (of website or an app) on Udacity, the online technology education provider. The person must get a nano degree or pass the course before being put on training at its Mysuru campus. Once he or she gets placed after training, Infosys pays back the student the course fee on Udacity.
Putting in hundreds of fresh minds with the new skills is a good move. India’s top five technology firms have over the past two years undertaken a massive exercise of reskilling over half a million engineers in newer technologies. “The need to retrain the workforce is further amplified with the automation of the old work procesess. Hence, companies need new skills. In addition to different technical skills digital also requires employees to acquire new soft skills. All this is being addressed by investing in training in design thinking and agile development methodologies,” says Peter Bendor-Samuel, founder and chief executive officer of Everest Group, a global outsourcing advisory.
Read more in Business Standard
By now nearly every organization has taken advantage of cloud computing in some form or other—Infrastructure as as Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS). Countless studies have shown that the business benefits of cloud are just too significant to pass up.
Everest Group forecasts that organic constant currency revenue growth for the top five Indian IT firms TCS, Cognizant, Infosys, Wipro and HCL Technologies will drop to 6.9 per cent in the ongoing fiscal, from 7.9 per cent in the preceding year ended March.
The collective growth of the five has dropped for the last seven quarters, from 13.2 per cent in the June 2015 quarter to 6.9 per cent in the March 2017 quarter, underscoring the pressures the companies have been facing.
Peter Bendor-Samuel, CEO of Everest Group said that the spike in resumes of mid-management IT professionals makes sense since in order to keep the cost under control IT companies must lay off mid-management employees to allow them to bring on cheap freshers and promote last year’s freshers which are also cheaper than the tenured employees.
“This phenomenon is further exacerbated by the pivot of the industry into the new digital business which requires reskilling workers and moving them from management positions into individual contributor positions.”
Jimit Arora, who leads Everest Group’s IT services research practice, said clients rationalize their service provider portfolios and consolidate spending with larger players. As this happens, the big 5 of Indian IT benefit. “Overall, I also see this as a broader trend in Big 4 (Deloitte, EY, KPMG, and PwC) where they are seeking to play a broader role in IT and digital services, and are not only looking to outsourcing to serve their internal needs but also partner with IT services companies to deliver end-to-end services to clients. In effect, they are looking to move beyond just being a consulting partner and looking to get deeper into implementation for their clients. Partnerships with the Indian-heritage companies, allows them access to on-demand, offshore talent and competitive price-points.”
Read more in the Times of India
Everest Group founder and CEO Peter Bendor-Samuel discusses India’s tech firms’ shift from IT to more advanced tech in this interview with NPR’s morning edition.
“Workers reach out to unions when they feel insecure about their employment, when they feel under-compensated for their work, and when they feel working conditions need improvement. In the export IT industry only the first of these conditions is starting to occur,” said Peter Bendor-Samuel, chief executive at consulting firm Everest Group.
The demand for digital transformation related technologies specifically is driving interest in certain metropolitan areas. The share of digital services being delivered in new service provider set-ups has been steadily increasing from approximately 25 percent in 2012 to 63 percent in 2016. “This percentage is expected to continue to remain high as service providers focus on expanding and broadening their digital capabilities,” says Everest Group Vice President Salil Dani.
A Trump executive order said US government agencies should look at ways to reduce the number of immigrant workers in the country, including reducing the use of H-1B visas. This is part of an election campaign promise to encourage employers to hire more US citizens.
This is having an impact on IT services, with providers and their enterprise customers in the US holding back from investing in services offshore as well as pausing hiring at their own operations in India. This is because it is not clear how immigration laws will change, according to Sarthak Brahma, head of pricing advisory at Everest Group.
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