Genetic Engineering Must for Indian IT
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.