The IT phoenix is a shadow of its past

Despite signs of recovery, the IT phoenix may not rise completely from its ashes. National Association of Software and Service Companies (Nasscom) president, Som Mittal, said, “Indian IT sector is recovering and but I do not think we can go back to old days of glory.”

According to Mittal, the industry is expected to grow at CAGR of 30% in 2010-2020. “The downturn has been severe and the growth in first half was flattish as compared to previous year,” he said on the sidelines of a Nasscom event here.

With companies increasingly taking a cautious route towards hiring, he expects the hiring to resume in the 8th semester instead of the 4-6th semester that used to take place earlier, though not at the same old level. “Industry will hire depending on need-base. There is a large pipeline, which needs to be absorbed before fresh hiring,” said Mittal.

Hiring across companies, specially the small and mid-sized, had entered into a lull during the slowdown leading to 5-10% increase in utilisation level of workforce. “We have come to a point that if we do not hire, the business might get impacted and any further increase in utilisation will impact the service,” added Mittal. It is estimated that hiring on an overall basis is down by 40-50% compared to last year.

The Nasscom president said that a lot of new trends can be seen in the industry that have moved on, like outcome-based pricing, result-based pricing, etc. The companies are also moving towards new geographies like China and the US to unlock opportunities.

Following the suit, Infosys, Wipro and TCS has started hiring for development centres in the US. “China is a destination country because global customers are setting up operations sensing the rapidly growing markets.” said Mittal.

Nasscom has proposed a new category for service visas for the US to replace the controversial H1B and L1 visa. “We have requested the US government to introduce service visa and have received positive response. The Congress has agreed to look at comprehensive reform,” he said. The service visa will enable companies to send their employees to the US on work for a certain period and will not lead to immigration or permanent residency. Currently 80% of business for Indian IT industry comes from US and UK.