Consolidating on the comeback trail

The price of doing well and making more moolah than the average Joe next door is unmerciful public scrutiny. Whether you’re the sole jackpot winner at Lotto, or a Microsoft muscling in to megabucks, or an Infosys involuntarily conferred with the title of market bellwether—the glare of the spotlight is blinding. Every charge you take, every loss you make, every sale you fake, somebody’s analysing you. And relentless and ruthless are the analysts, ready to scythe you down senseless just as soon as send you soaring. Grow you must, else bite the dust—quarter after quarter after quarter, without any letup whatsoever. Poor results/projections from the bellwether sends the Indian tech stocks tumbling; then a quarter later, an upward revision of selfsame figures miraculously triggers a rally.

But, anyone basing their assessment of the Indian software industry and the prospects for a global tech revival entirely on the state of the stock markets would be more than just a tad foolish. A sounder approach would be to dissect all what global analysts are saying these days, and then arrive at a "what’s in it for us" conclusion. Of course, some of these very analysts talked of an economic revival in the second half of last year (which never happened) and didn’t predict the dotcom bust (which happened). Attribute it to "unforeseen external circumstances" if you will, for all’s fair in love, war and research (0.8 probability).

First up is Mark Stahlman, described as ‘one of the most recognised authorities on technology trends and an early visionary on the impact of technology and the Internet.’ He was one of the few to anticipate the collapse of the Internet boom. Now with American Technology Trends, Stahlman feels that the post-Internet tech slump is largely over. He sees early signs of a pickup in spending on computer systems and expects to see an increase in sales in the second half of 2003 and 2004. Further, he says next-generation platforms that will greatly simplify computer use will be likely to lead growth in 2005 and beyond, and compares the recent slump to the 1985-86 downturn—the last time there was a major platform transition.

Next in line is BusinessWeek, which polled 30 economists in the US for its mid-year economic forecast survey for 2003-04. Almost all were in agreement that growth in the second half of this year will be stronger than in the first, setting the stage for a "strong recovery." Corporate outlays for tech equipment are on the rise, and the trend in capital goods orders is turning up, the survey noted, concluding that "the conditions for the long awaited rebound are now firmly in place, with interest rates, stock prices and the dollar more accommodative to growth than at any time in the last three years."

Now turn to IDC India for Directions. The research firm says that the rebound has already started—in 2003 it estimates that the IT spending growth rate is expected to revive and grow at 3.7 percent. While the double-digit growth of yesteryears is a thing of the past, worldwide IT spending will rise to 6-7 percent in the next three years. Even more heartening, IDC India predicts that the domestic IT market will grow a healthy 16 percent in the current year. The total domestic IT spending was Rs 259 billion in 2002, and IDC India expects it to reach Rs 559 billion in 2006. Nice. And contrary to popular perception, IDC believes that the Internet will continue to be a key driver of growth, as e-commerce continues to grow and an increasing number of companies continue to embrace the Net.

Finally, we come to Gartner. The Gartner Summit India 2003 held recently in Mumbai laid out a smorgasbord of insights. Gartner is realistic and pragmatic in its analysis, admitting that IT budget growth is "still bumping along at zero," but taking heart in the fact that at least IT budgets aren’t falling any further. Users and vendors will have to wait until 2004 for a more pronounced global IT recovery. Global IT services spending will surpass $707 billion by 2007, which represents a 5.7 percent compounded annual growth rate. Gartner says the Indian IT services industry will touch $13.1 billion by year-end 2003 and grow at a CAGR of 29 percent from 2003-07. And as for the BPO backlash, it will have played its course by the end of 2004, and will not have any significant impact on the offshore/global delivery model of BPO and IT services.

So what’s in it all for us in India? We will grow and grow and grow. The jury has passed its verdict and it’s unanimous. Despite the Chinas, the backlashes, the slowdowns, the sluggish government policies, the you-name-it, everyone’s big on India—from Gartner to McKinsey to IDC and the rest. They all have their advice for us though, including that seminar favourite: "Move up the value chain!"; and, profound exhortations to "Avoid complacency!" Yes, individual companies may fall by the wayside (sometimes onto lavish personal assets, unabashedly amassed fraudulently), but the industry, Indians and India will win. We’re going to have some very very satisfying quarters ahead indeed. Unless of course the world is bushwhacked by trigger-happy goons again.

Val Souza, Editor
valsouza@expresscomputeronline.com