There are green shoots in IT industry: R Chandrashekhar, Nasscom

In a chat with ET Now, R Chandrashekhar, President and CP Gurnani, Chairman, Nasscom, say the main challenge as an industry is to redefine what is industry. Edited excerpts


ET Now: Have the IT industry been facing headwinds of late?

R Chandrashekhar: Two or three things which have happened in the recent past have in some senses dampened the mood. For example Brexit which happened at the end of June. Everybody knew the referendum was coming up but nobody actually expected that it would happen. Then, more recently, the US Fed meeting. There was some expectation that the rates would be raised.

ET Now: Did not happen...

R Chandrashekhar: It is good news in some ways, and not so good news in some ways. We also saw again in terms of sentiment the IMF announcing that the growth rates in US, UK, Europe were all lowered by about 0.2%. Now these contributed not just to a certain negativity in terms of sentiment for the IT industry but for the economy as a whole. The result was that I think there was a dampened sentiment in terms of investment and certain amount of uncertainty coming on top of little bit of prevailing uncertainty because of the technology situation.

The technology situation means that many of the large companies felt they were at the crossroads. They needed to take major decisions on which way to go and how far and how fast to go the little path and so on. So all of these did result in some kind of delays in decision making. This impacted the performance of the industry in India to a certain extent in an anticipated ways because these are things which were not expected or visible, let us say in February or March. But it is important to note that these are temporary occurrences, there are not any fundamental changes which have taken place. As far as the larger technology shifts are concerned, this was brought out quite adequately and in great length in our perspective 20-25 report and we believe that nothing has changed fundamentally from that broad scenario.

ET Now: Mr Gurnani, would you agree that it is a temporary occurrence? You meet customers all the time but this time we are not seeing some secular trend. Each company has a different reason why they are seeing pressures, some have cited USPFS, some are saying overall pricing pressure. Give us the perspective from someone who is actually meeting customers frequently?

CP Gurnani: You know R Chandrashekhar’s views regarding some of the uncertainties around the world. I do not think there is any disagreement on that. That there is a delayed decision making, there is no disagreement on that. Fundamental thing that all of us have to learn is industry is shifting as one of the speakers in this BPM Summit used the word the outlook is scary bright. I have never heard this. When I had heard cautious optimism, I had heard ray of light in the clouds. I think most of us need to readopt ourselves. This is a time of transition, the reality is technological spend is actually increasing but the pocket from where it gets spent is not necessarily the CIO and it is coming in from various other pockets; it could be the chief marketing officer, it could be the chief network officer, it could be the chief customer care officer or it could be the chief digital officer.

Now many of us have not become multi modal because we were used to dealing with one IT department or one BPO department or one network department, The spend pattern is very,very clear. Cyber security is almost happening 2x, 3x and in Nasscom we did a study and we think jobs will be created which are 10x and our biggest challenge would be supply. So our challenge as an industry number one is to redefine what is industry. Is it services industry? Is it a global innovation centre by various companies? Is it the new age companies like a Flipkart or a Snapdeal or an Amazon because while they are retail companies, they are also technology companies. Redefine what a healthcare services company will look like. End of the day, a Manipal hospital using cognitive computing to determine the future of diagnostics of a cancer patient or an Anu Acharya mapmygenomes and doing predictive guidance and analytics. Is it technology industry or is it healthcare industry? As soon as we in Nasscom adopt ourselves, as soon as your member companies adopt themselves to the new paradigm. I think this industry has still got a huge potential.
ET Now: Is 10-12% still feasible in the current environment? I know this is a question we keep asking you every few weeks, every time we see a profit warning from some company but in the current environment does it really look realistic?

R Chandrashekhar: Well you know the thing is that when we issue a guidance, it is done on the basis of accumulation of what is happening across the entire industry, big companies, small companies, multinational companies, Indian companies and all of that. So there is a certain process which goes into that. As we just discussed a little earlier, there are a number of negative developments which have happened in the last few quarters which have certainly put a certain amount of downward pressure. At the same time as Raman was saying there are some green shoots as well which are also visible.