A sense of excitement, of jumping into something green or greener, pervades right through IBM India offices today. The organisation is in the midst of transforming itself to focus on the Indian market. It is metamorphosing with the aim to grow the more profitable India business, even as globally IBM has reported 21 quarters of declining revenues.
Indian IT firms, especially in the mid-tier segment, have seen a rise of private equity firms placing stakes on them. While faster technology at mid-size IT services companies have attracted PE firms such as Blackstone, Carlyle, ChrysCap, Bain Capital, The Baring Asia and others to invest in the sector; PE-backed companies have seen faster growth at a time when their large listed peers slowed down due to uncertain market.
Corporate tussles have rarely been as public as the one between Infosys founder and former CEO N.R. Narayana Murthy and MD and CEO Vishal Sikka. That wrangle, which led to the latter’s resignation, has brought to focus many issues at the company.
As Abidali Neemuchwala completes six quarters as the chief executive of India’s third largest IT services firm, he seems to have figured out a way to break the jinx of sluggish growth that the company has seen for years.
Catch Sanchit Vir Gogia, Chief Analyst, Greyhound along with Anshoo Nandwaani, Principal Analyst, Greyhound on our latest Greyhound TV series, Analyst Axiom, a Greyhound Studios production.
A replacement for Vishal Sikka, the first non-founder to become the CEO and MD of Infosys, must be an internal candidate who has risen up the ranks and is favoured by co-founder N.R. Narayana Murthy, industry analysts said.
When Vishal Sikka took over at Infosys he was prescient about automation taking away jobs and clients shifting investment dollars into newer digital technologies.
India’s largest IT firm Tata Consultancy Services has appointed veteran Ravi Viswanathan as its global chief marketing officer. Viswanathan’s appointment comes at a time when the company, like its peers, is battling not just increasing competition but also heightened protectionism in its largest market — US. Viswanathan, who will be in charge of the marketing and communications functions and based in Chennai, will directly report to new CEO Rajesh Gopinathan.
On May 2, 2017 Infosys announced plans to hire 10,000 American workers over the next two years.
At Greyhound Research we believe, steps such as these by IT Services Providers eloquently tell a tale of the pressure they are experiencing under the new Trump administration.
The software industry is facing mounting challenges as countries from Australia to the United States have moved to tighten work visas to limit the influx of foreign workers.
American President Donald Trump’s policy to protect jobs by imposing restrictions on H-1B visas is unlikely to be of any help to that country and may hurt US interests, say experts. What Trump is seeking to protect are entry level jobs that are being phased out by the tech majors, with automation, artificial intelligence and robotics paving the way to increased productivity.
With the latest missive from the Donald Trump administration on H-1B visa, cautioning companies against misuse, the immigration issues of the Indian IT sector are back in news. And it is not the US alone that is drumming up protectionism for political gains. However, industry observers say that Indian IT services companies are resilient enough to weather such issues.
In a fresh blow to software professionals, the Trump administration has moved to bar entry-level programmers from the H-1B visa programme.
US’ decision to temporarily suspend the expedited premium processing of H-1B visas will lead to process delays for IT firms too.
The Indian software services companies will breathe a sigh of relief as the Indian ministries, authorities and industry lobby had a dialogue with a visiting eight-member US delegation headed by Congressman Bob GoodLatte, on the ongoing concerns of H1-B visa holders.
Despite the impending dark overtones cast on India’s IT sector, the reality on the ground is far from anything bleak. Irrespective of the announcements from US president Donald Trump, Brexit concerns and the slowing global economy, the IT sector seems to have factored the low spell and will be only marginally impacted. The sector will likely grow 8-9 percent in FY2017E and could grow at same pace or accelerate in FY2018, according to a technology report from Kotak Instituitional Equities released a week ago.
Donald Trump’s efforts to limit the number of temporary workers in the US will dent India’s software industry.
India’s famed multi-billion dollar information technology (IT) industry has been facing challenging times over the past 6-12 months with top-notch IT companies already facing earnings pressures in recent quarters due to tough business environment prevailing in their most lucrative US and European markets.
Today a legislation impacting H1-B visa programme has been introduced in the US House of Representatives making it difficult for companies in the US to employ skilled foreign workers. Among other things, the bill more than doubled the minimum wage requirement of H1-B visa holders to US $130,000.
It may not be a good time to be a techie in America. Correction: It may not be a good time to be a non-American in Trump’s America.
Software services industry, already facing pressures on profitability and revenue, has become the latest target of the Trump administration’s moves to protect American jobs.
Hoping for a “business-friendly administration”, Infosys chief Vishal Sikka says Trump himself is an entrepreneur and a business leader and therefore, he “expects that this will be the case where business and innovation friendly regime.”
“2017 is going to be a volatile year for the Indian IT industry,” says Sanchit Vir Gogia, Chief Analyst and CEO, Greyhound Research. “The pace of technological changes is very high and it will lead to substantial job cuts. The companies will try to be a lot leaner,” predicts Gogia.
Indian IT services companies have been facing competition from upstart players with highly specialised skill sets based in advanced markets, especially in areas such as cloud services and analytics. The cash-rich Indian IT companies are responding to this by acquiring companies overseas and thereby enhancing capabilities. Wipro spending nearly $1 billion in acquisitions last year is a case in point. In 2017, we are likely to see big boys of the Indian IT industry loosening their purse strings to make large acquisitions. “They will look at companies with sizeable revenues,” says Gogia.
IT major Infosys’ Rs. 5.9 crore ($868,250) severance pay offer to outgoing General Counsel David D Kennedy is a move to play safe with Donald Trump administration in the US, say experts.
Information technology industry strived to find newer opportunities and markets in 2016 as geopolitical uncertainties, a challenging business climate and technological shift clouded outlook.
Winter has set in, and yet, the biting icy winds do not stop New Yorkers from getting to work. At Liberty Street, inside the Times Inc. office, there are a couple of financial service providers and media companies talking about digital transformation.
India’s software exporters seem to be the new incumbents in the global technology outsourcing space. In the next two years, clients such as BNP Paribas, Procter & Gamble, Johnson & Johnson, Citigroup and DuPont will look at their existing contracts and ask global information technology (IT) services firms to bid for them.
Reliance Industries is gearing up to enter the software services business and plans to take on India’s IT giants, as the energy-to-telecom conglomerate taps the growing potential of the industrial internet.
The exit of Sanjay Purohit, the seventh key executive to quit Infosys, shows the challenges its first non-founder chief executive Vishal Sikka is facing. Sikka, a former board member at business software company SAP AG, has been trying to push the Indian IT services firm to shift its business model from a people-dependent one to higher productive mix of software and people.
The Royal Bank of Scotland’s decision to shelve its IT deal with Infosys may have hit the Indian company’s stocks on Tuesday but the development could have a ripple effect on many such projects for the IT sector and result in more ramp downs.
HCL Technologies, India’s fourth largest software services company, expects digital, cloud, analytics, automation and internet of things (IoT) to grow faster than the traditional business segments, accounting for up to 20 per cent of revenues in next three to four years, from current five per cent.
About two years ago, Ganesh Ayyar, CEO of Mphasis Ltd, began interacting with his younger, digitally-native employees to understand the moorings of a new generation. In his interactions he noticed deep underlying currents that could completely change the way these kids worked towards their future goals and also perceived their employer’s ability to meet those goals.
N R N Murthy, co-founder Infosys, may have stirred up a hornet’s nest by saying Indian IT firms behave like immigration agents, but the model that he claims he created to be less dependent on visa’s did not yield the desired results at Infosys, say industry sources.
The tepid third quarter performance of India’s largest IT exporter Tata Consultancy Services (TCS) is hardly good news for India’s overall IT sector. The company’s dollar revenue for the December quarter slipped 0.3 per cent over the previous quarter, beaten down by its India and Japan business, slowdown in the insurance business in the UK, as well as the Chennai floods.
The much reported visa fee increases for both the H-1B visa (from $2,000 to $4,000) and the L-1 visa (from $2,250 to $4,500) have unsurprisingly caused some ripples between Indian and US official bodies. This visa fee increase applies to Companies that have more than 50 employees more than 50% of which are H-1B visa employees. This affects mainly Indian owned companies in the US.