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Heroes 2013: IT's up again

Rebound in US economy, greenshoots in Europe spell hopes for Coder Ave.

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The year 2013 has been a busy one for the Indian IT sector marked by a sharp turnaround and the return of N R Narayana Murthy (NRN) to Infosys as its executive chairman in June—11 years after his retirement.

NRN’s return was heralded as a last-ditch attempt to save the former IT bellwether, which after 16 quarters of losses, began to see a reversal of fortunes, two quarters after the founder’s return.

A revival of the 3.0 strategy, product platform and services business, two round of wage-hikes in the year for employees and the strengthening of Murthy’s core leadership team, with son Rohan, as executive assistant, have all led experts to be hopeful of NRN’s promised turnaround of Infy in three years.

On the flip side, NRN’s return saw seven senior management exits and initiated the trend of rival IT firms snapping up their top executives.

Among these, Infy veteran, Ashok Vemuri, becoming CEO of iGate was the most significant development.

The second major development during the year was the Mahindra Satyam-Tech Mahindra merger, which saw Tech Mahindra finally rise to the fifth largest IT firm after four long years, from the ashes of one of India’s most controversial scams – the Satyam scam. The company is now valued at $2.7 billion or Rs 16,000 crore.

In terms of company deals, another major development was the majority 42% stake acquisition of Hexaware Technologies by private equity firm, Barring Asia in a deal worth $465 million, or Rs 3,000 crore.

This was significant because it put to rest three years of rumours about the mid-tier IT company’s acquisition.

The US Immigration Bill was another huge blow to the IT industry. The Bill, on the pretext of bringing jobs back to the US, proposed drastically slashing the number of skilled workers in the US from other nations by half and double the cost of H1-B visas.

This led to more on-site hiring and setting up of local delivery centres and a cutting down of Indian fresher hiring.

Som Mittal, head of IT industry body, Nasscom, as well as top IT leaders have travelled to US to lobby against the passing of the Bill – and negotiations are still on, on this front.

The recent US shutdown took away some interest off the Immigration Bill, but talks have now been resumed in the Parliament.

The rupee depreciation, which hit an all-time low of Rs 68.85/$ on August 28, also saw IT firm bottomlines taking a hit, while exporters of IT services rejoiced the exchange rate benefits.

However, the silver lining was the re-bounce of US economy that led to IT sector being awash with long-term, large deals propelled by new budgets for discretionary spends after a lull of almost two years.

A spark of innovation, also came in with the increasing fixation of software clients of Indian IT firms demanding social, mobility, analytics, cloud (SMAC) and big data to be added to the outsourcing services traditionally provided.

Non-linear revenues, of which SMAC is a part, is expected to grow from a mere 2% for IT firms currently to a $18 billion opportunity by 2015.

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