Information Technology (IT) as an industry has become a major part of businesses worldwide and has emerged to rise beyond just a service. Every industry uses the latest technology to conduct business transactions and render related services effectively. India is amongst the countries where technology is growing at its peak and is a leading IT Infrastructure Provider on a global platform. For instance, TCS, one of largest India’s software providers reported better than anticipated growth of 8% in net income. The IT industry's constant progress has also improved employment opportunities for many related to this field in India. Still, the progress of India’s tech companies is affected and is on its way to facing more adverse challenges due to the current trending recessions happening internationally. One of the challenges includes the decision of European clients to decrease their tech funds till the war situation in Ukraine is resolved and the situation is regulated. This will impact India adversely as this client base from Europe typically accounts for a quarter to a third of Indian firms’ sales, cutting down the budget will allocate fewer funds for imports which will directly impact our IT industry revenue. Also, the current situation in the US market will do nothing but let us down. The US federal reserve is trying to reduce inflation by raising the credit rates and reducing the money supply in the economy. As the borrowing rates are hiked it would discourage the companies to borrow funds instead the firms will try to spend less, in this case, the companies which would generally import X amount of IT services from India would now import X-1 because of the less credit availability this would again impact our revenue which is generated by exporting IT services to the US. Apart from these challenges other software developers have time and again proven to be aggressive competitors in this cloud computing and IT service management industry. For example, ServiceNow Inc an American software-based company is a developer of cloud computing platforms and delivers IT service management. Its managing workflow for enterprise operations has seen revenue surge six times since 2015. The Indian outsourcing players have failed to keep up pace with the preferences of international companies Accenture Plc and Deloitte Consulting for implementing futuristic IT platforms. Salesforce Inc., which owns Slack’s business productivity tool, had a third of SAP's revenue in 2017. Shopify Inc. a Canadian e-commerce company commanded a 19% share last year in digital-commerce software, against Oracle's 6%. These competitors can influence our clients by offering the same IT services by ascertaining competitive pricing, hence the customers will shift because of this we will lose our revenue which will ultimately create a trade deficit. Now, what is Trade Deficit? In simple words, the Trade deficit is nothing but Receipts minus Payments, this occurs when there are more payments that one has to make and secondly when the revenue from exports has reduced, which will naturally result in lesser revenue generation. Pursuing what these foreign tech giants are doing won’t necessarily guarantee a window out of the current as well as the next global recession. But rather than worrying about the demand, the Indian tech firms must focus more on the projection of how the sector, the workers, and the workplace will evolve in the years ahead. Until now top-tier Indian outsourcing firms should have built billion-dollar franchises by implementing newer platforms in their businesses whereas, in reality, the growth seems to be relatively slow. Our IT Consultancy firms need to strategize plans and directly think about taking some bold decisions to boost our capabilities that best suit the future. Thank you.
Well explained!!
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ReplyDeleteSimplicity at its best
ReplyDeleteEasy to understand!
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