Infotech challenges

The big names in India’s IT industry are undergoing a transformation to keep up with evolving times, and hence Infosys, TCS and Wipro have had rather subdued results. Their guidance, when available, isn’t rosy. They have the challenging task of changing their business models while doing their day-to-day business, to meet the demands of new-generation firms. They woke up late to the revolution of machines (artificial intelligence) and robots doing the work that were earlier done manually by Indian firms for overseas clients. Today there are robot anchors and even robot cricket and football commentators. There is a hospital in India with a IBM Watson computer, which if fed data on cancer cases over 50100 years can come up with a diagnosis that can be handled by any doctor. This is happening in almost every sector. So these firms’ earnings have dropped significantly.

Compounded with this is the global economy’s weakness. Some US and European companies are struggling and so are wary of spending. There are no signs yet of the global economy picking up, despite the generous quantitative easing programmes of several nations. Most of this money seems to go into commodity speculation, though some is coming to emerging markets. India is among the beneficiaries. Companies like HCL that are growing inorganically and have changed with the times are in a better position and haven’t had to reduce their targets.