The year 2009 will see clients of IT service companies taking longer to finalise their budgets compared to prior years, said R. Chandrasekaran, President and Managing Director, Cognizant, talking about what the year ahead meant for the IT industry.
In 2008, because of the global slowdown, clients across industries went through “a rapid rethink on business priorities,” he explained, which resulted in them taking a re-look at technology and related spending. This pressure on companies to adjust to the new environment and adopt cost-saving initiatives would in turn benefit global sourcing. “In difficult economic times, clients are more likely to increase their offshore spending in order to get more done with the same or fewer budget dollars,” he said.
Besides economic pressures, which are cyclic in nature, certain industries were going through changes that required extensive deployment of technology, said Mr. Chandrasekaran. These industries, which he termed as ‘emerging verticals,’ would contribute much more to the client-base of IT vendors in the new year than “established verticals” such as BFSI (banking, financial services and insurance), telecom and manufacturing, he said.
Citing the media and entertainment industry as an example of an ‘emerging vertical,’ he explained that digital transformation and geographic expansion had emerged as key opportunities for this industry. “In respect of digital transformation, companies are still grappling with how to reach content out to customers,” he said. Apart from adopting new technology, the media and entertainment industry had got to look at a global talent-pool to ensure that it obtained the maximum value, he said, which meant an opportunity for IT services vendors.
He listed healthcare and life sciences, energy and utilities and travel and hospitality as other examples of emerging verticals.
In terms of geography, the IT industry had consciously shifted focus to Europe and Asia Pacific in the last two years, he said. “Though Europe is also being challenged, we believe that Continental Europe, which has hardly seen any IT penetration relative to the U.K., may continue to witness traction during 2009.
Secondly, serious investments will be made in Asia Pacific and the Indian offshore majors will make a serious dent in these markets, especially in the Indian markets over the next couple of years,” he added.
Stress on quality
During recruitment, the focus would be on quality rather than quantity, said Mr. Chandrasekaran. “Companies are increasingly trying to break the linearity between headcount and revenue growth.
They are investing heavily in services such as automation, consulting, and analytics.
As a result, generating revenues is no more necessarily about adding headcount,” he said.
Adding that the emphasis would be on productivity, he said, “the next wave will be about multi-skilling and multi-tasking. In the past, jobs were created using a homogenised hierarchy. However, in times to come, hybrid jobs — those that regularly comprise work in more than one functional area — may become more the rule than the exception. More than ever before, IT careers will be about a confluence of technology, industry, management and consulting skills that can help companies to grow up the value chain. And organisations that provide specific career options in these areas will be able to attract and retain the best talent in the industry.”