Three levers for India’s IT and ITES companies – forging ahead

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India has for a long time been recognized as one of the world’s leaders in Information Technology (IT) and IT Enabled Services (ITES). We enable the world’s IT companies by being the world’s biggest IT outsourcing destination for example, comprising about 67 percent of the $130 billion market.

The IT and ITES statistics in India remain impressive: it is still among India’s biggest sectors with revenues of around US $160 billion in 2016, and has been growing at a CAGR OF 13.7 percent between 2010 and 2016, which is almost 4 times more than the global average growth. The forecast is for it to continue expanding at a CAGR of 9.1 percent to a value of $350 billion by 2025.

Challenges exist however. The changing nature of the political and technological landscapes has thrown up new issues for India’s IT and ITES industry.

Disruption on top of disruption

India’s social landscape has changed, with a new middle class emerging and consumption becoming far larger than it was previously – thanks mainly to people having more disposable income available. This has enabled India’s IT companies to use technology to create new routes to revenues, and to do so they have been deploying disruptive technologies like cloud computing, automation and data analytics. India’s social computing, mobility, analytics and cloud (SMAC) market is expected to grow to $225 billion by 2020.

IT and ITES companies in India are embracing the change that digital has brought, and addressing digital transformation. CEOs and CIOs are enjoying the benefits of cloud computing platforms, software defined networking (SDN) and workforce collaboration tools.

Cloud platform adoption offers multiple benefits, from substantial cost savings through accelerated application delivery thanks to on-demand management of computing resources to greatly increased flexibility that can better meet varying customer demand.

Lever one: cloud gaining momentum

In India today, being able to deliver via the cloud is becoming increasingly essential – the 2017 State of the Cloud report predicts that by 2019, 80 percent of all IT budgets will be allocated to cloud solutions.

The impetus cloud has generated has seen India’s IT and ITES companies recognize the great cost reduction potential of cloud, and that its virtual data storage capabilities and rapid self-provisioning can give access to major computing power. The pay-as-you-go model gives not only the opportunity to reduce costs but also increase control and flexibility.

That flexibility is evidenced in cloud becoming today’s preferred platform for large applications, particularly customer-facing ones that need extra agility. Cloud computing helps companies reduce time to market for apps that need to scale dynamically, and developers are increasingly using cloud for its wealth of advanced new services that can be incorporated into applications - from machine learning to data analytics, chatbot-based customer service apps to IoT solutions.

Why cloud creates value

Cloud, thanks to its on-demand nature, enables applications to acquire all the computing capacity they need in real-time, meaning IT and ITES companies are able to provision capacity as and when they need it – or of course reduce it when demand falls again. Which in turn enables companies to serve customer needs better.

In addition to this agility, cloud services also let companies remove IT servicing wait and queue times to create greater efficiency. Value is had right out of the gate in the shape of a shift from the CAPEX to OPEX model, while cloud also reduces the need to invest in traditional data centers – the Wall Street Journal has reported that data center maintenance accounts for up to 80 percent of annual IT budgets – a significant impact on any company’s bottom line.

By 2018, IDC has forecast that over 85 percent of enterprise IT organizations will commit to multi-cloud architecture, and the more companies gain trust in public cloud, investment will begin to shift from private to public cloud. Advances in cloud security and data protection regulation, deployment of firewalls, proxies, remote access and rigorous code audits will help ensure customers can have access to secure, trustworthy cloud services.

A challenge remains in terms of skills however; research shows that enterprises engaged in large scale cloud adoptions still prioritize cost optimization over particular skillsets. 49 percent of businesses have said they are delaying cloud deployments due to a cyber-security skills gap – something that must be remedied urgently.

The hybrid approach

But with all these opportunities potentially waiting to be exploited, how can India’s IT and ITES companies, who have existing legacy infrastructure already in place, take advantage of the cloud?

Because more established IT and ITES companies have legacy infrastructure in place, transitioning to cloud is less economically feasible for them – but they can leverage them to their benefit. Companies that adopt elements of cloud through the Hybrid IT approach can scale operations more comfortably and reduce costs.

Hybrid IT reduces fear and doubt around cloud adoption rendering legacy infrastructure redundant and also addresses the necessary security concerns. In time, Hybrid IT could provide a viable stepping stone towards greater cloud adoption.

Lever two: SDN becoming essential

Software-defined networking (SDN) can provide huge benefits, because it decouples network control and forwarding functions, making network control directly programmable. Using SDN, companies can reduce costs and enjoy unheralded flexibility.

Software defined network has the power to change the way in which IT and ITES companies operate in India: it helps companies improve network performance and efficiency, provides increased availability and resilience, and ultimately makes underlying infrastructure separate from applications and network services.

Lever 3: collaboration

Collaboration and UC&C tools are vital to IT today and to digital transformation moving forward. UC&C gives enterprises a single, consistent offering that combines mobile, email, voice and web-conferencing communications, and empowers end-users to be more productive and have a better user experience.

With IT and ITES companies today having employees working from numerous devices and across different geographies, UC&C tools and the ability to collaborate is a huge advantage. It lets companies support customers no matter the time or the location, and creates a more empowered, effective workforce.

To read more about India and the IT and ITES landscape, download the whitepaper titled “Succeeding in a time of disruption: three levers for India’s IT/ITES companies”.
Bala Mahadevan
Bala Mahadevan is CEO, India, at Orange Business Services. His role incorporates leading Global Communications Solutions and Global Services in India, and he is responsible for designing and executing business strategy to drive business growth in India.
 
Bala holds a Bachelor of Engineering from Birla Institute of Technology and Science, Pilani, India. He is an accomplished leader with a track record of key contributions in various leadership roles, encompassing business transformation, leading global businesses having multi-location, multi-faceted technology environments, setting up off-on shore development & support centers and more. His intense and varied experience in the IT services industry has cut across various service lines, verticals and local-global geographies for over 30 years.