Profit and revenue forecasting has become more complex in the face of rapid technological change, making long-term contracts riskier, said Venkatraman Narayanan, Managing Director and Chief Financial Officer of Happiest Minds Technologies.
His remark came from the backdrop of rising attrition, exchange-rate volatility, and weak global cues affecting the information technology (IT) industry.
“Profitability and revenue forecasting is becoming very complex, as complicated as weather forecasting,” Narayanan said in an episode of Life After Listing, a Moneycontrol series that focuses on the key changes for a company's management and founders/promoters after their company goes public.
Because of fluctuations in the value of the rupee, attrition rising in high double digits, the Russia-Ukraine war, and COVID-19, among other factors, predicting profitability or growth is a lot more complex than it was earlier, Narayanan said.
Happiest Minds posted one of the highest attrition rates in the IT industry in the last financial year when it soared to 22.7 percent in the fourth quarter.
Changing contract negotiations
Narayanan said less room for predictability has changed the way contracts are negotiated in the digital IT space.
“Large million-dollar contracts earlier were safer as companies could predict the trends for the next five years,” he said.
With rapid disruption in technology, the components of predictability are also changing now, making long-term contracts riskier.
“If I sign on a long-term contract of let’s say $5 million, or $10 million, I only know what I can deliver in the next six months to 12 months because after that there is so much technology disruption. Do you want to lock yourself in for such a long term? So these are questions that are beginning to now surface,” said Narayanan.
The conversation around how to approach new technologies has taken centre stage.
“So on the technology front, we just spend time talking about what is Web 3.0. Did you miss the bus, you have to make sure that you pick the right technology because there is no dearth of the new technologies that are on offer.”
Happiest Minds is focused on making ahead-of-time investments in emerging technologies, said Narayanan.
Drone technology
“We are making investments in Web 3.0...Process automation, robotic process automation, and artificial intelligence-based solutions are other areas. One area which we really picked up on ahead of time was drones,” he said.
Along those lines, Happiest Minds is helping the Indian government with the DigitalSky platform, a unified platform to track and trace all drones in the country.
According to Narayanan, the company is among the first movers toward drone technology and is capable of taking it to the market.
“We are playing a significant role in building the platform. The proof is in the delivery that we have done on DigitalSky and a few other projects.”
Narayanan added: “Similarly, we have also been talking about AR (augmented reality) and VR (virtual reality). We have taken a couple of them to our customers and we are working closely with them. Web 3.0, it’s in its early stage. We're making investments in it.”
Happiest Minds Technologies enables the digital transformation of enterprises by leveraging disruptive technologies such as artificial intelligence, blockchain, cloud, digital process automation, Internet of Things, robotics, drones, and virtual and augmented reality.
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