From despair to cautious optimism: Indian IT industry shows amazing resilience

The global IT industry has a roller coaster ride this year amid the Covid pandemic. All previous predictions on annual IT spend went haywire as the virus forced establishments to shut down across the world. With sectors like aviation, hospitality and core manufacturing are functioning at zero revenue and struggling to stay afloat, the ability of enterprises to spend on IT services went down drastically. Global consultancy firm Gartner came out with a report at the middle of the year saying global IT spend is likely to decline by 7.3 per cent this year compared to last year. Quarterly numbers of Indian IT firms also started reflecting the same. Market leader Tata Consultancy Services (TCS) posted 4.1 per cent drop in revenues in Q1 (April-June) as compared to the previous quarter. Wipro's Q1 revenues fell 5.3 per cent on a sequential basis, while HCL Technologies' revenues from operations dipped 4 per cent.

However, as the year progressed, organisations across the world swiftly adopted digital means to reach out to their end consumers. Teachers start teaching their students with the help of edtech apps. Sick people logged in to medtech platforms to consult doctors. Retail and consumer goods companies designed attractive digital interfaces to enable their customers to purchase without any human interventions. Most enterprises tapped audio and video conferencing services to stay connected with their employees.

As such digitisation drive of businesses increases, organisations began to spend on IT services. As a result, new-age technologies like cybersecurity, which is being used to protect businesses in the work-from-home scenario, app development for facilitating customers to transact virtually, and Cloud for enabling seamless experience witnesses robust growth. And such uptick drove demand for IT services. So, towards the end of September, the sense of despair seen in the Indian IT industry turned into hope and cautious optimism. Infosys revised its revenue growth guidance to 2-3 per cent for FY21 from 0-2 per cent earlier. The commentary from the management of most IT biggies and mid-tier firms turned positive. The hiring trend started to improve with firms like TCS announcing salary hikes from October.

As we are all set to enter 2021, the Indian IT industry has shown its resilience and led the economic recovery. The trend of digitisation started with the pandemic seems irreversible, which is expected to put the Indian IT industry on a long-term growth trajectory. The successful execution of projects when more than 90 per cent of employees work from home also puts Indian IT firms in good stead for future offshoring work. If the results of Accenture are to be taken as a yardstick, a multi-year bull cycle is in the offing for the Indian IT firms going forward.