Ge­netic Engi­neer­ing Must for In­dian IT

The Economic Times - - The Edit Page -

The hope that In­dian in­for­ma­tion tech­nol­ogy sec­tor, which brings in around $150 bil­lion of ex­ports, will make up for the fall in mer­chan­dise ex­ports needs a re­al­ity check. Our IT com­pa­nies fared mis­er­ably last year, though a few show some signs of life in the last quar­ter of 2015-16, which ended in March. Our largest soft­ware com­pany, TCS, saw net prof­its jump in the quar­ter, but in­vestors might shrug off this gain af­ter a US court slapped a near-$10 mil­lion penalty on it for al­leged ‘theft’ of pro­pri­etary soft­ware from an Amer­i­can com­pany, Epic. TCS is fo­cused on vol­ume — or mar­ket share — rather than mar­gins. Apart from its Epic fight, this could be­come a drag on prof­itabil­ity and share­holder value.

Ri­val In­fosys has beaten profit fore­casts af­ter a very long time. But the best news for the com­pany is that un­der a new man­age­ment headed by Vishal Sikka, it has man­aged to stanch ta­lent bleed­ing: in one year, at­tri­tion has come down from 22.3% to 17.3%. This is cru­cial, be­cause IT com­pa­nies live or die by brains, and a com­pany headed down­hill will lose its smartest minds faster to ri­vals. Wipro has un­der­per­formed, ac­cord­ing to an­a­lysts. But the main bug in the soft­ware story is this: Nasscom, the IT lobby, had fore­cast dol­lar rev­enue growth to12.3% in 2015-16. In re­al­ity, the num­ber posted by com­pa­nies ranges be­tween 7% and 9%. The com­pa­nies can blame re­ces­sion in the West to pla­cate share­hold­ers. Or they can try and rein­vent them­selves for a more chal­leng­ing fu­ture. The lat­ter will re­quire ac­quir­ing skills and ta­lent be­yond the IIT-IIM spec­trum. The fu­ture of IT de­pends more on cre­ativ­ity than rou­tine cod­ing. Th­ese com­pa­nies need to hire cre­ative peo­ple from all dis­ci­plines, not just con­ven­tional man­agers of rou­tine code writ­ers. Big data, fin­tech and aug­mented re­al­ity call for new ta­lent.

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