Indian IT Industry

[ManSingh]

To answer your question:
1) A lot many people update themselves constantly.
2) All tech sector conferences/events like "Embedded Systems Conference" held in Silicon Valley/Boston are also held in Bangalore. So there is a skill base in Bangalore, right?
3) All desi companies provide the latest possible service offerings like block chain, IOT, deep learning, AI etc. Without skill set upgrades, desi firms would still be on Visual Basic, COBOL??
For ex: See below:
https://www.infosys.com/nia/

I could go on and on. But the above should give you an idea.

There are a few constraints when you are an Indian IT company. But that is a whole different story.

This article was not written by me, it was written by an IT professional in India so are you saying that he is wrong or not fully correct?
In any case, the many people who update themselves will survive. Others will perish. That is the law of nature everywhere.

So from what you say, I guess this is no reason to worry. Acche din.

It would be too difficult to post how Indian IT works in a single post. The current phase of Indian IT occurs every 5 years. It has happened in the past and will happen in the future too. The business model is such that that it makes sense to shed off a few experienced folks( >8 years ) at fixed intervals and make the company leaner. This allows hiring of fresher's, who can be trained in latest technologies from scratch without any baggage.
The intelligent one's already know that max life of a developer role in desi IT is only upto 12 years. After that you are a liability to the company
unless you won't work for 18 hours a day.

BTW, above is true only for "IT firms". Indian engineering scene is more than that. I can only speak of embedded industry. All big names like Honeywell, Cisco, Texas Instruments, Samsung research, United Tech., Broadcom, Landis Gear, Zebra Tech,, ( can't recall all names now ) have a big presence in India. Can't be lack of skills.

Btw, in this round of people shedding the ones that have been targeted are people managers or non tech leads. They have been discounted as being unproductive to orgs. It is kind of sad as those guys were the one's who benefited the most from growth which implies they were the best of the folks when the going was good. Also they are most likely to have emi's, kids to support just because of their age profile.

[Marten]

there was a rumour on whatsapp that Premji was looking to sell his 75% stake in wipro and exit..from ibanking circles.

this was denied by Premji in ET today morning. have to believe him because at that level, reputation counts for more than money.

Will be fun when he sells to a Sino or Nippon co!

[morem]

there was a rumour on whatsapp that Premji was looking to sell his 75% stake in wipro and exit..from ibanking circles.

this was denied by Premji in ET today morning. have to believe him because at that level, reputation counts for more than money.

Will be fun when he sells to a Sino or Nippon co!

Heard from a chaiwallah in investment banking that this is true.
Will find out in due course of time .

[nam]

Is there any desi cloud company, with bells and whistles like Amazon WS, but cheaper....?

Wouldn't cloud services in India be cheaper from Uncle land?

[negi]

^ Afaik issue is not cheap issue is with similar coverage and availability only Azure and Google's cloud platform come close ; HP has experimented with it's own cloud but did not register similar success . IBM and Oracle are at it but I think among these prices are very similar . Desi or bidesi it is simply not viable to take AWS headon unless you have a diruptive tech which allows you to own, run and maintain a data center better and cheaper than AWS.

[Viv S]

Is there any desi cloud company, with bells and whistles like Amazon WS, but cheaper....?

Wouldn't cloud services in India be cheaper from Uncle land?

No it would not. Its not a labour intensive business, the hardware costs are the same, land & energy are less accessible, the technological eco-system is less developed and most importantly the existing players have already achieved critical mass. Those economies of scale cannot be matched for the foreseeable future.

[KJo]

It would be too difficult to post how Indian IT works in a single post. The current phase of Indian IT occurs every 5 years. It has happened in the past and will happen in the future too. The business model is such that that it makes sense to shed off a few experienced folks( >8 years ) at fixed intervals and make the company leaner. This allows hiring of fresher's, who can be trained in latest technologies from scratch without any baggage.
The intelligent one's already know that max life of a developer role in desi IT is only upto 12 years. After that you are a liability to the company
unless you won't work for 18 hours a day.

BTW, above is true only for "IT firms". Indian engineering scene is more than that. I can only speak of embedded industry. All big names like Honeywell, Cisco, Texas Instruments, Samsung research, United Tech., Broadcom, Landis Gear, Zebra Tech,, ( can't recall all names now ) have a big presence in India. Can't be lack of skills.

Btw, in this round of people shedding the ones that have been targeted are people managers or non tech leads. They have been discounted as being unproductive to orgs. It is kind of sad as those guys were the one's who benefited the most from growth which implies they were the best of the folks when the going was good. Also they are most likely to have emi's, kids to support just because of their age profile.

My take is that because of the HUGE demand, everyone and his mom and pop got hired into IT in India and got raises and bonuses for the last 15 odd years. Business cycles have changed, and automation and political policy change has caused the demand to reduce. What to do with so many people in India looking for IT jobs that don't exist anymore or will go away?

Not much different from what happened to manufacturing jobs in the US. They went to China and other places. Indian Government has to be careful rather than beat their chest and say "nothing will happen onlee" like the minister did a few days ago.

No downturn in IT sector, reports are wrong, jobs will come: Ravi Shankar Prasad
http://www.hindustantimes.com/business- ... I9BVI.html

I don't think there will be a collapse, but there will be a big shift for sure. Some will leave IT as they did not care about it and used it like a cash cow. Others will look into other areas within IT and solve Indian problems rather than become an outpost for the US.

[negi]

Another unglamorous , taken for granted but important aspect of any cloud offering be it Infrastructure, Platform or even Software is 'operational costs'. Unfortunate thing is in the short term valuation of a company increases significantly with number of customers it can show for it's cloud offerings , however issue is cost of supporting infrastructure and related upkeep for serving so many customers increases at a similar rate so unless one has spent enough time dealing with these scaling issues and found the right mix of deployment , devops and maintenance procedures to keep the costs down all such companies will struggle to maintain positive revenue . It took SFDC more than a decade to show positive revenue . AWS is unique in the sense that for significant part of it's existence it was not expected to serve as a revenue making stream all that infrastructure was meant to just support Amazon's retail ops. So all of us who are in this rush to cloud frenzy are doing with the hope that some sugar daddy acquires us at a bloated up prize and people can retire early .The sad thing with new crop of bay area companies is most of them want to create a perception of value rather than make something which really adds value.

[bahdada]

Is there any desi cloud company, with bells and whistles like Amazon WS, but cheaper....?

Wouldn't cloud services in India be cheaper from Uncle land?

CtrlS/Cloud4C, nowhere near better but competitive enough across South/SE Asia.

[nam]

^ Afaik issue is not cheap issue is with similar coverage and availability only Azure and Google's cloud platform come close ; HP has experimented with it's own cloud but did not register similar success . IBM and Oracle are at it but I think among these prices are very similar . Desi or bidesi it is simply not viable to take AWS headon unless you have a diruptive tech which allows you to own, run and maintain a data center better and cheaper than AWS.

I had used a IAAS solution in India and found it to be cheaper than a AWS IAAS. Ofcourse the difference was bells and whistle in AWS, while the desi one was plain vanilla.

What kind of bleeding edge tech is used by AWS which cannot be replicated/bettered? I presume the tech is being developed by US developers. Can't desi companies use our developer armies to replicate some of the tech? and compete with AWS atleast in India / Asia?

I still consider our "armies" as an asset if used properly. Right now they are been wasted by our IT companies, who just want slaves.

Funny it may sound, the best product company in India is the Indian Government. Perfect example, Adhaar, while our self styled "most favoured companies" are busy filing H1Bs.

When there were true competition for American companies in India, they have struggled. All Indians had to do was to replicate the model. Flipkart vs Amazon, Uber vs Ola, Groupon vs 100 of replicas, Apple/Samsung vx Micromax etc..

[Sridhar K]

Our company bought CMC and few of them ended in my team. Real good techies who had pretty good experience due to the Govt projects. These guys had done wonders with legacy tech and not so gr8 infra. I am yet to see a state of the art digital enterprise that is better than what i saw in Reliance petro in 2000 even in some of the gr8 MNC banks and global petrochemical giants. IoT, paperless office with the tech of those days. Heck I am trying to implement 1% of the components in my shop and it is along journey as there is lot of legacy crap and only lip service by management. My company which had real good techies and did some solid work lost out in organizational level innovation after the outsourcing boom post dot com as we focussed on mass body shop or team body shop. Good talent got absorbed by the client or got converted to IT service delivery management or in other words leave the colonels on the field and move the senior into command centers. As the industry grew even majors were moved out of the field into command centers to manage new theaters opening up due to demand.

[negi]

I had used a IAAS solution in India and found it to be cheaper than a AWS IAAS. Ofcourse the difference was bells and whistle in AWS, while the desi one was plain vanilla.

It is a mistake to evaluate infrastructure on features alone; the most important aspect about infrastructure is "availability" not just in technical terms but geopolitical as well . The kind of geographical distribution AWS enjoys it cannot be rivaled . Chances are consumers of your cloud infrastructure are customers in NA and EMEA and due to data sharing and privacy regulations they will prefer that their cloud infrastructure be located in these regions . Anyone from APJ entering this domain and hosting data centers in say India or China is trying to swim against the current . Now of course if someone wants to host data centers in Ireland and NA like AWS does he or she are welcome but what exactly is the differentiatior or value proposition , calssic example is Flipkart it took on Amazon head on and failed it is running alright but on VC money.

What kind of bleeding edge tech is used by AWS which cannot be replicated/bettered? I presume the tech is being developed by US developers. Can't desi companies use our developer armies to replicate some of the tech? and compete with AWS atleast in India / Asia?

As I said tech is not the key thing although I am trivializing the Engg. that goes into maintaining data centers but it is like saying what is that likes of Sobha , DLF and Prestige have in terms of know how around constructing a building which a bunch of top architects and civil Engg. cannot come together and achieve ? The right way is to not compete with them head on but to leverage an existing behemoth and ride on it's shoulders to offer services/software which has enough value to generate profits .

Take for example Salesforce platform it's completely hosted on Oracle RDBMs sure Oracle corp makes a lot of money with every node/cluster SFDC adds to it's data center but the margins which Salesforce makes on it's platform are huge (even there after you subtract marketing and sales expenses SFDC barely registers profit). Then there are tertiary players like Servicenow (a 15+ billion USD company now) which started of as a service company that built applications on Salesforce cloud . These are the kind of examples which Indian IT has to follow to generate jobs and add value ; product space is a tricky place to be , they happen in an organic setup , just this urge to make a product is not enough , there has to be demand and good fit.

When there were true competition for American companies in India, they have struggled. All Indians had to do was to replicate the model. Flipkart vs Amazon, Uber vs Ola, Groupon vs 100 of replicas, Apple/Samsung vx Micromax etc..

None of these are competitors ; India is a large market and there is a space for anyone who has right product/offering along with a sustainable business model . The way Indian counterparts are operating is they have former but none of them have been able to sustain operations without being injected with cash by VC firms so the glass is half empty in that sense , sure there are positives i.e. people employed by them are making good money and many might have moved into good profiles something not possible in established cos but the catch is do these companies have a leadership which believes that they have an offering which is relevant and if persevered and operated with a tight leash will generate profits in realistic time frame ?

[nam]

Geographic availability will just be one of the criteria, I have to consider when looking for a cloud solution, primary for legal reason. Even Amazon was US only when it started up. So don't see why a Indian solution need to be worldwide from day 1.

Don't understand why should Indian/Asian markets be surrendered to American companies, just because startups dont plan to roll out in US/EU? specially if it able to compete on a features.

I would consider Flipkart as competitor to Amazon in India. Else it would have been like Google, an absolute monopoly. Flipkart is buring VC money, Amazon it's own. Either ways they are both burning money.

One of the prime advantage American companies have is their ability to leverage it's status in US markets to crush competition in other markets. Indian IT companies are the foot soldiers. I have seen French companies give preference to crapy French cloud solutions , over Oracle.

Indian IT companies have claws in Fortune 500 IT departments, how many Indian solutions do they propose?

[negi]

^ Your arguments are based on right sentiments but they are just that i.e. sentiments issue is Indian government and markets do not have maturity and hence there are no relevant laws which require the data centers for Indian companies to be hosted in India . A good example is Flipkart and even Reliance they are huge users of AWS now let us assume there was a law which prohibited Indian consumer data to be hosted on any server outside of India then these companies would have to search for locally hosted services . Fact is EU has strict laws around this so AWS's Ireland site caters to that (apart from tax savings etc) . Now coming to America operations the fact is pick any global enterprise SW company chances are majority of it's revenue comes either from NA or EMEA ; India and APAC (outside of Jpn and ANZ) despite all the traction are small markets and hence not great fit for Infrastructure as service play.

We will need to first bring in some laws or regulations which promote hosting here despite cost and technical disadvantages only then any India based company can host infrastructure here and be in a position to compete with AWS and others.

As we speak almost every 'large' IT company based out of India is slowly decommissioning it's local data center and moving to AWS/Azure for devops/operations and even enablement / training .

[KJo]

You live by the sword, you die by the sword.

Infosys' Pravin Rao: Clients seek 20-30% cost take-out on existing work over 3-5 yrs

India's USD 150-billion IT industry is in the midst of a pronounced slowdown, as clients are asking IT services companies to carry out the same projects at prices which are 20-30 percent lower than before. The slowdown in tech spending is expected to continue for the next 12-18 months as clients are not reinvesting in new technologies at a rapid pace. This is putting immense pressure on revenue growth of existing IT companies.

In conversation with Moneycontrol, Pravin Rao, Chief Operating Officer of India’s second largest IT services company Infosys, said: "From a client perspective, technology spends are not changing dramatically; at the same time they know they have to invest in newer areas. So, they are taking cost-take-out initiatives in most client organisations from what is known as run-the-business. Typically, run-the-business is 70 percent of spends and now there is an urgent pressure to take costs out of this to 50 percent of spends and repurpose that towards new technologies and transformation."

As more deals come up for renewal, clients are asking for 20-30 percent cost take-out, explains Rao. Even if a company has been successful in execution, clients are asking for a reduction in costs by 20-30 percent for the same projects due to commoditisation. “At the same time, the pace of reinvestment is happening at a much slower pace compared to the cost-take-out,” adds Rao. New business is hard to come by.

[Singha]

>> as clients are asking IT services companies to carry out the same projects at prices which are 20-30 percent lower than before.

I am surprised they are not asking to hire only americans and to keep inshore...

[Javee]

^^They have tasted blood, very difficult to let it go. Most of them run companies not for the upliftment of poor Americans, they do it to maximize shareholder value and their payout. There was an article early this week that said all of Trumps hungama reduced about 10K visas from Indian IT companies and questioned that is American job market so small and volatile that these 10K jobs change the face of the market.

[Prasad]

That 20-30 % number is very suspect. Margins will be hit severely at that level. There is a concerted push though to hire more americans and to cut down outsourced personnel and hire full time americans in their stead. But they can't replace all of them.

[KJo]

That 20-30 % number is very suspect. Margins will be hit severely at that level. There is a concerted push though to hire more americans and to cut down outsourced personnel and hire full time americans in their stead. But they can't replace all of them.

One of my friends in the West Coast lost his job and INFY hired him and placed him in Mickey. He is a US citizen. Another lady, a top CxO gori lady in my previous company is now hired by Infosys BPO. I myself have gotten calls. There is definitely a big push to hire American citizens.

[Javee]

Pravin Rao is doing some damage control and has clarified that his company is not going through margin pressure.

[Sridhar K]

Prasad. 20-30% reduction in mananged services contracts is not suspect. Yes margin pressures are very high.

[Marten]

That 20-30 % number is very suspect. Margins will be hit severely at that level. There is a concerted push though to hire more americans and to cut down outsourced personnel and hire full time americans in their stead. But they can't replace all of them.

20-30% would the entire margin for most companies. Yes, there might be pressure to improve, but I doubt it can be that much across the board.

[negi]

A lot of people in tech these days for their moment of glory on linkedin and social media are exaggerating things either way ; the signal to noise ratio has reduced drastically . Things are not as bad as being made out to be . Times are tough and will expose those who made small kingdoms inside of these large behemoths and took it as their retirement job ; on the other hand those who have fire in the belly and have managed to keep themselves abreast of domain as well as some niche work will always find takers . The margin squeeze will force companies to re-think their bench strength a bit more discipline and automation should allow IT companies to attract skilled people pay them well enough and yet maintain decent margins. However hard decisions will have to be taken and a lot in middle management might have to be re-assigned or let go if all they do is people management.

[SRoy]

Reduce hierarchies.
Standardize on roles.
Introduce and enforce regular examination and certification measures.

But these will not happen as there are vested interests. Any kind of examination/certification model, even if just graded instead of outright pass fail, will expose vast majority right from top to bottom.

Some people do just "people management" because the roles are not clearly defined and levels of hierarchies creates conditions for overlaps, encroaching into sub-ordinate's authority is common etc., etc. People loose interest.

Hierarchy ridden structures actively discourage people with skills. No sir, they filter out people with skills. Active job descriptions that requires you to have minimum number of reports handled to qualify for application.

There are lots of structural issues.

Domino affect. Check the enrollment figures for CSE / IT countrywide.

As an industry need to mature up.

[Javee]

20-30% would the entire margin for most companies. Yes, there might be pressure to improve, but I doubt it can be that much across the board.

Absolutely, it won't happen. But 30% over the period of the contract over and beyond the usual savings,and this is for ASM, they are forcing us to take automation for routine stuff. I'm working with a client who asked us to create a model to measure IT service providers based on business outcomes. We are also preparing charge back mechanisms for poor performers.

Not all news is glum, there is still money to be made in AD and transformation projects. There are lot of opportunities around manufacturing modernization, industry 4.0 and others. These are typically significant opportunities in the range of $50-100 million. The top 3 Indian vendors are in the fray along with the other MNC's. TCS has done some fantastic work for P&G in the manufacturing and packaging area.

[Prasad]

As you go up, unlike product companies or rnd labs, what else are you gonna do but for people management in the garb of project management? You're not going up the tech heirarchy since your job as an outsourcer is limited. Unless you branch out and pour money into your own product lines and/or rnd you wont havea backup, alternate biz line if your primary model goes for a toss.

[KJo]

While I don't think the Indian IT industry will die, there will be some change. It says there are 40 lakh people employed, I think this number will shrink dramatically and the average quality of an Indian IT person will go up. Less quantity, more quality. The rest will leave.
This is actually good news for India and hopefully the smart ones will start companies addressing Indian problems, not just naukri of the West.
IT will again be populated by people who want to be there, not crammed with people who just wnat to make a quick buck.

Bleak future ahead for sacked IT employees: Experts
http://economictimes.indiatimes.com/tec ... 688660.cms

Recruiters and experts said the number of jobs lost is unprecedented in the history of IT industry and perhaps larger in magnitude than the 2008 global economic crisis. A small number of people sacked from companies like WiproBSE -0.60 % and Cognizant may be absorbed by second rung firms, but since the number of resumes in the market is huge, not all may find jobs. There are about 40 lakh Indians employed in the IT industry in India and overseas and of them, 12 lakh professionals cannot upgrade their skills or acquire new ones, Kris Lakshmikanth, founder of Head Hunters India, told ET.

“Of this 12 lakh, almost half would gradually be shunted out of the IT industry,” said Lakshmikanth. According to their estimates, close to 2 lakh professionals every year would be retrenched by IT companies in India and abroad.

[CalvinH]

Rumors were floating for Wipro (and later denied by Azim Premji) but now news is out that Infosys founders are planning to sell their ~12% stake together to one buyer. Thats not much of stake to get substantial management power but a significant one for a potential suitor of Infosys who wants to reduce roadblocks for an eventual buy.

From the management shareholding pattern and market cap perspective Tech M and HCL are ideal. Especially Tech M. Not too big to swallow for a PE firm and provides enough stake for decision making.

I am expecting one exit to happen before end of this year. This is good for Indian IT sector.

[CalvinH]

Not all news is glum, there is still money to be made in AD and transformation projects. There are lot of opportunities around manufacturing modernization, industry 4.0 and others. These are typically significant opportunities in the range of $50-100 million. The top 3 Indian vendors are in the fray along with the other MNC's. TCS has done some fantastic work for P&G in the manufacturing and packaging area.

The work that Indian IT services companies are capable of doing in areas other then IMS and ADM is highly underrated. However they lack real leaders to lead such businesses internally. Most current ones have tasted quick success and rise without real hard work and are not the one to slog out, make hard decisions and have patience to grow such business.

[Javee]

PEs could potentially bite a company with large cash/liquid reserves, something like Wipro. HCL has went through a tough round of cost cutting under the previous CEO/CHO, dont think there is much optimization left. Infy still has some fat left, I would doubt TechM being sold by AM.

[CalvinH]

I dont think reserves will be a factor. As they will be considered in valuation anyways.

[Singha]

Promoters can milk cash out before exit with huge dividend payouts and stock buybacks

[pgbhat]

Reduce hierarchies.

Attempting to fix this will expose a lot of people. Most problems stem from this. Too many layers to the top. People need to be hired for their opinions not just technical abilities.

[Marten]

Rumors were floating for Wipro (and later denied by Azim Premji) but now news is out that Infosys founders are planning to sell their ~12% stake together to one buyer. Thats not much of stake to get substantial management power but a significant one for a potential suitor of Infosys who wants to reduce roadblocks for an eventual buy.

From the management shareholding pattern and market cap perspective Tech M and HCL are ideal. Especially Tech M. Not too big to swallow for a PE firm and provides enough stake for decision making.

I am expecting one exit to happen before end of this year. This is good for Indian IT sector.

After this point, none of them should be taken seriously. What they have been doing the past three years is to try and increase share price for their personal gains, at the cost of both employees and other shareholders! All this, while pretending to be with the employees. I don't have a horse in the race, but the stink affects all associated cos and competitors/partners etc. Wipro stake sale will happen -- just a matter of time since the big man might want to lean back a bit more and not worry about spikes or steep valleys in valuation. Sonny is definitely not in the same league so they are probably better off running a family trust in the background. Only IT scion who has proven any kind of mettle is Shiv's (Nadar, not our Dr) daughter. And even that is probably because of the running start? The big 4 will make a larger comeback in India by gobbling up one of the majors or the other.

PS: There are two or three major Sino or Japanese firms that are looking to make like massive investments (multi billion) into IT. They are only getting warmed up now, and funds are cheaper than the US or Europe!

PPS: Note that NM keeps denying any talks regarding the sale. This is third time in a year that someone has mentioned due diligence, so it will probably take a year to know the truth!

[Javee]

^^+1.

As for HCL's, unlike all other companies, Nadar still owns a most majority shares in HCL and still works for the tech side of the company. Roshni has hands-off approach on the tech side of the business and more interested in the philanthropy and the educational side. As you rightly said, I think Sino or Japanese will make a bigger play in the coming years. I think NTT is one prime candidate with deep pockets and an appetite to grow.

[Singha]

softbank has a war chest of 100b . i heard half is GCC and half is japani .... and they are willing to wait a long time for payoff not reliant for quick 10x exits. their cost of raising capital in japan will be <1% (?) given the low interest rate there and vast pension funds.



they could back the likes of ntt data to make a move. i believe these east asian cos run a tight ship in general in terms of frugality, work hours, "being tough on slackers" etc. both samsung (9 hrs) and LG in india have timecard swipe in/out for their dev centers i was told. no "soft touch" of the eu/us cos.

[Marten]

Singha Saar, we have 9+ hours too. Folks who are known to work from home over and above regular hours are nevertheless questioned when we leave at 5.30pm!

Javee saar, you are right. NTT made a play a decade ago! They are a large team already and will definitely be growing by next year. A few of the bit players tried screwing over investors by inflating their worth and demands, and that has resulted in delays all over. Jap cos look at each other to understand the situation. A few held back after initial setbacks. Jerry Rao and M team screwed over quite a few by using the number game -- in the context of growth without merit. They had enough sharks in their higher ranks and managed to screw over EDS and then HP teams as well. Such folks discredit Indian entrepreneurs by their jugglery and the focus is back on the nickels and dimes. Hopefully we will see some difference over the next decade.
PS: Statements are mostly opinion and apologies to all those who are affected by it.

[Javee]

Most Indian IT companies work 9 hours a day in India. Softbank has not acquired a pure services company. The other black hole where funds are cheap is China, somehow we have not heard any players from China other than Alibaba. Strangely, NTT is still a bit player in the overall market. A high profile acquisition will give them that prestige.

HP is one lost opportunity, starting from their EDS acquisition. They are still large, but growing smaller by the quarter. Erst while EDS/HP held large RFP contracts that are up for renewal and the big 4 Indian companies are all fighting to eat HP's pie.

[Singha]

There is a rumour that netz will merge with hp enterprise

[Singha]

Tencent has bailed out flipkart last month.
Fkart raised 1.4b from msft ebay and tencent