The Hindu : Karnataka / Bangalore News : There is growth but uncertainty prevails

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Tuesday, Oct 26, 2010
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Karnataka

Karnataka - Bangalore

There is growth but uncertainty prevails

Deepa Kurup

There are positive signs of recovery but the IT industry is still holding its breath

— FILE PHOTO

IT'S NOT GREEN LIGHT YET:Though there is cautious optimism, the sunshine industry has not

BANGALORE: Last year around this time, Prakashan Kartha had changed four jobs. Two of the medium-sized IT (information technology) companies he had worked with shut down, and the third, a leading firm in Bangalore had asked him to “voluntarily” resign as part of the then all-pervading “downsizing” exercise. Three of his close friends were forced to shut down services-based technology ventures they had started, and many others had lost jobs.

The big four

Now, he says, “jobs are back”, echoing a tag line from a popular television advertisement for an online job portal. The four IT outsourcing majors that announced their results last week posted growth in their earnings in the quarter ended September, and are big on hiring. Going by their growth story, the global demand for IT services appears to be on the rise and Indian IT firms are cashing in on this.

However, the IT sector — comprising large, small and medium-sized firms — is not as homogenised an entity as it is made out to be. The “growth story” barely holds water when it comes to medium and small-sized firms which find that clients continue to remain cautious and are not ready to loosen their budget strings, just yet.

Still a struggle

“IT growth isn't as universal as people believe it to be,” says the proprietor of a small services firm in Bangalore. While four of his six clients were “wiped out” during the recession, two others are restricting their IT spending to essential and maintenance services.

“Add to that the fact that 30 per cent of our employees quit a few months ago when the larger firms began to recruit. Most of the small companies are finding the ‘growth' celebrations in the media a little hilarious and premature,” he says.

Mid-sized companies too are finding that “growth is not really coming through”. Grappling with large attrition challenges, and overseas clients still choosy about price points, they find that the downturn is not yet over for them. Anil K.P., Senior Vice-President (HR) at outsourced product development firm NESS Technologies, is more optimistic. “There is growth and there are clear signs of recovery in larger accounts. Compared to the big companies, small and mid-size firms are taking longer to bounce back. But it's picking up,” he explains. Srishti Anand, Technical Analyst (IT and Telecom), Angel Broking, explains that the bigger companies are doing well as clients are spending in a big way on discretionary services — that is, services that will transform their business, unlike last year when the business was limited to management of essential/ managed services.

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