Feb 23, 2013 11:50 PM IST | Source: CNBC-TV18

Next $100 billion: EU, Asia surprise to boost IT growth

N Chandrashekeran of TCS, Vineet Nayar of HCL Technologies, Som Mittal of NASSCOM and Noshir Kaka of McKinsey offer, on CNBC-TV18, perspectives on agenda for growth as the Indian IT industry makes its tryst with achieving the next USD 100-billion mark.

Join CNBC-TV18 at the National Association of Software and Services Companies (NASSCOM) Leadership Summit where the mood this year is certainly better than it was last year. The Indian information technology sector  is feeling a lot more confident and NASSCOM has projected a growth rate of between 12-14 percent for the year, which is better than the earlier estimate of 10.2 percent that it delivered for the previous year.

To discuss if the improved sentiment will translate into higher IT spends, better pricing on CNBC-TV18, is a panel comprising N Chandrashekeran of Tata Consultancy Services (TCS), Vineet Nayar of HCL Technologies, Som Mittal of NASSCOM and Noshir Kaka of McKinsey. The experts will also offer perspectives on agenda for growth as the Indian IT industry makes its tryst with achieving the next USD 100-billion mark.

Below is an edited transcript of the show on CNBC-TV18

Q: The Society of Indian Automobile Manufacturers (SIAM) announces its forecast every quarter which are quuckly revised. So, is the NASSCOM estimate going to be more consistent?

Mittal: I think we have been consistent over the years.

Q: Your track record is better?

Mittal: Yes, it is much better because we represent a global industry and I think the uncertainties that we face are large. The results were very close to what we had forecasted. Against our forecast of 11-14 percent, the IT industry grew 10.9 percent in constant currency terms. So the 12-14 percent is a well-researched estimate and I think if you look at the exit rates at which investors closed their Q3 and with the rate of deals of being inked, we are quite confident that the 12-14 percent should be met.

Q: Conservative or confident- what’s the forecast?

Chandrashekeran: I think it is a good estimate to go with.

Q: Vineet?

Nayar: I don't know what that estimate means. Different companies will grow at different rates because they belong to different industries, are focused on different geographies and have different strengthens, so I don’t know what the aggregate means. But I agree with Som, he has got the estimate right. NASSCOM has always got its estimates right in the past, so there is no reason why they will be wrong this time.

Q: Noshir?

Kaka: I think he is exactly right. I think that firstly, even if I consider the lower end of the 12-percent estimate, I don’t know how many industries globally will be able to actually grow 12 percent in the current economic environment. So I think that is absolutely correct. Underlying this we see very big differences between sectors, geographies and companies across the industry. So, I think overall a 12 percent growth as projected by the industry is in this context is very good.

Q: There are companies that confident while others are more cautiously optimistic in their outlook for 2013. As things stand currently, has the nervousness left ?

Chandrashekeran: The overall mood is much more calm and optimistic now than the same time last year and the commentary is much better. But there are various perspectives – what you hear from the media, what you hear from the analysts, what you hear from the companies and what you hear from clients.

The clients are very optimistic. Customers are executing their plans according to schedule and budget. Across the board, the flow of data data indicates a turnaround and the growth in Europe is going to be a big surprise.

Q: What is your opinion?

Nayar: The mood at Davos this year was far more optimistic than before. The discussions were increasedly centered on digitisation and transformation from what I call a legacy business to a new-generation business based on social media, mobility or analytics. CEOs, especially from the US,  announced that the days of cost-cutting were behind them and the only way out of the current situation was to deploy excess cash into transformation of their organisations.

Q: Are they sitting on considerable levels of cash?

Nayar: Absolutely. Europe will throw a surprise when companies in the region start to implement efficiency and disruptive innovation along with the start of the boom in Asia. So, going by the Davos mood, I think the mood is a lot more optimistic with greater use of IT to solve problems and boost revenues .

Q: Noshir, do you think Europe is going to be a positive surprise for the Indian IT sector ?

Kaka: Growth in this industry often pauses, it doesn't go away entirely. There are pauses when decisions are not taken as was the case last year where there was such a massive flux, that it was uncertain whether Europe would stay together.

The minute calm starts to prevail, there is a change in decision-making and that is what is starting to happen in Europe. I think ther could be a positive surprise not just from Europe, but from some countries as well.

Q: Does Obama's announcement of bringing the jobs back to help American companies worry you? What do your clients say?

Mittal: I think the clients will have to do what has to be done - they have to grow their businesses and be globally competitive. It is important to note President Obama's comments on STEM (science, technology, engineering, and mathematics) shortage.

In fact in the US today , unemployment in STEM sectors is less than 4 percent and there is a need for more resources. So, I think as an industry we are helping US companies become competitive and irrespective of what the government will say. Though I think most of Obama's comments focused on manufacturing, there is the question of the US being as competitive as it is today without outsourcing ?

So, I would think that the only worry is that in this rhetoric some Act is not passed without adequate debate. We are confident that at the end, wisdom will prevail.

Q: So the American corporation will prevail?

Mittal: That is true.

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