Shrinking American Pie For Indian IT

The domestic IT industry, which rode on the pandemic-led digitisation, is bracing for a slowdown as the U.S. and Europe stare at a recession. Will this crisis lead to new opportunities?

- ASMITA DEY

IN OCTOBER, while announcing Wipro's second-quarter results, CEO & MD Thierry Delaporte did not shy away from acknowledging the very preliminary but palpable footprint of economic headwinds in business conversations and at times - in decisions. "In speaking to our clients every day, we have seen a change in the level of optimism as businesses around the world are dealing with inflationary pressures and geo-political turmoil, energy crisis, and rising interest rates... There is indeed a certain level of uncertainty. Large technology companies are slowing down and it's a reality," he said.

Infosys goes a step further. "We are ready in this macro environment for all types of client work, whether it focuses on digital, growth, or cost. We want to be careful that we are cognisant of what's going on in the macro environment and make sure we go into this watchfully. We have a very strong set of capabilities in digital and Cloud. We also have capabilities in automation and are seeing traction in cost programmes. We want to make sure that both engines are made available to clients," says CEO and MD Salil Parekh.

Discretionary spending in select sectors, including retail, high-tech, telecom, and financial services, has been hit hard. These are transformation projects that aim at going digital, but only indirectly affect the company's topline or bottom line for instance, projects that improve stakeholder experience by leveraging artificial intelligence (AI) or machine learning (ML), says Nitin Bhatt, technology sector leader, EY. "We see more caution at the way clients are looking at services," adds Parekh.

$227 billion Estimated size of the Indian IT industry at the end of FY22

80% Revenues of top-tier IT firms come from the U.S. & Europe