How will Indian IT sector get through its identity crisis?

Thomas Reuner, Principal Analyst, Ovum

INDIA: The suggestion by Nasscom to rebrand BPO as BPM is a reflection of this crisis (see related comment here). Despite top line growth, leading providers such as Infosys and Wipro are struggling to meet shareholder expectations.

A bundle of other factors, including rupee and wage appreciation, competition from other low-cost locations, investments in nonlinear growth, and the cost of hiring staff in non-English speaking countries (particularly in Continental Europe and Latin America), is adding to the complexity of the challenges facing Indian service providers.

The crisis is further exacerbated by a group of about 30 software companies is breaking away from Nasscom as they feel the organizations is predominantly representing the larger service providers.

We are hoping that Nasscom will reveal how the leading Indian providers aim to achieve their goal of being perceived in the same vein as the leading Western providers without being burdened with their pitfalls, notably higher cost structures, more complex organizational structures and slower decision-making processes.

These details should go beyond the usual noise around Big Data, Cloud and Social Enterprise, but need to demonstrate how they aim to differentiate with these topics. Only with answers to the points raised, the Indian IT sector will get out of the crisis mode.