There are decades where nothing happens, and there are weeks where decades happen. A quote that that has been innumerable times over the last year can easily apply to India’s $194 billion IT and BPM sector, which is also the largest private-sector employer in India. After years of posting single-digit growth, the accelerated shift to digital post-pandemic has turbo-charged the industry. Most IT firms have projected double-digit growth rates this year and doubled their hiring targets.
Debjani Ghosh, the President of the National Association of Software & Services Companies (Nasscom) believes this is not just recovery but a rebuild, and something that is here to stay. In an interview with Moneycontrol, Ghosh spoke about the need to move away from just cost advantage, the unprecedented war for talent and the startup boom in India.
Q: During the onset of the pandemic, people thought this is going to be doomsday. And now you have IT companies growing in double digits again after 5-6 years. Do you see this momentum sustaining for the next few years?
A: I do believe that we are at the beginning of something very different, at the beginning of a completely new playbook. This is not a recovery, but this is a rebuild for the entire industry.
First is just the basic foundational shift from cost advantage to customer advantage. Acquisition today is becoming a huge competitive differentiator. And companies are trying to build out their innovation strength by getting new companies on board. Hybrid gives you tremendous opportunities, again to build differentiation.
And then last, but not least is the shift to new segments. Healthcare was an obvious one in the last two years. But we are also seeing companies pay attention to markets that they have not really focused on in the past. So there’s tremendous new thinking or rather a new lens that’s coming into it. Digitisation, as you know, is increasing by the day.
We need to build a foundation that allows us to do two things. One is to move from the cost advantage pitch that we have been so well known for to cost-plus customer advantage, but customer advantage above all. And second, if we can ensure that talent continues to stay a competitive advantage for Indian IT, I absolutely think we are on a good with it. This is going to be very long innings.
Q: You mentioned cost plus advantages. It’s also interesting because we are seeing IT companies talk about consulting in a big way this year. TCS has spoken about it, Wipro is also making bets in that direction. So, do you believe that we’re well-poised again, to kind of derive value higher up the value chain?
A: So if you look at what’s happening, what is this accelerated digitisation doing to — let’s start with the end customer segment. Let’s start with the healthcare segment or the finance segment or whatever have you, whichever sector you pick.
First of all, digital transformation is not automation where you automate your existing processes. That’s one myth, we have to purge. That’s not what’s happening. And if it is happening, then those companies are not able to leverage the full benefit of digitisation.
The beauty of digital transformation is you have the ability to completely reimagine your business processes with the help of technology. Now to do that, you need people who are — I call them bilinguals, who are good at both, who have the technology, strong technology foundation, who have the tech skills, and also have the domain expertise, or at least a domain understanding. But more than anything else, they have the ability and the presence of mind to apply technology to solve whatever problems that exist, learn and solve whatever problems exist.
So when you’re looking for these people, I do believe that the IT sector is tremendously well poised. Whether they do it as consultants, they do it as end-to-end partners. I still believe we’ve only touched the tip of the iceberg, we will see these models evolve.
If I was a betting person, I would say we will see a lot more interesting models coming up where we will be an end to end partner on the entire business process, where we will not just tell them what to do, but we will also be responsible for ensuring they get the desired outcomes. And I think that’s where we can absolutely add value.
Q: We’ve been covering this huge war for talent that we are seeing across the technology landscape in India. IT companies, startups, technology companies, and so on. And it doesn’t show any signs of abating. What are companies going to do beyond increasing the number of freshers they hire? Is this an opportunity to hire from smaller towns in India, tap into fresh pools of talent?
A: Everything you’ve said yes, and some more. Why is there a talent war today? And we’ve been saying for a very long time that talent is completely reimagining the competition landscape for companies and technology. But today, it’s doing so for all sectors.
And why is it impacting everyone, because globally, I do not believe we have done enough to grow the base, the talent base that existed fast enough to meet the demand? So today while demand is growing at 30 percent plus CAGR, supply is growing at maybe 19 percent to 20 percent CAGR. And that is fundamentally the problem. So there’s a very small pool of people who are what you call employable in the digital economy. who have what we call digital skills.
And unless and until we grow that pool faster, we are going to continue to see challenges. So the question now is what do we have to do at least as India to grow the pool fast enough not just to meet our local needs, but also to meet some of the global needs? Because that’s what’s going to give us tremendous advantages globally. Business today will go where talent is. There is tremendous opportunity ahead of India to ensure that we become that place where digital talent exists.
And there are a few things we can do, which are absolutely in our control today. Some of the changes that have to come about in the education system, NEP, the National Education Policy has already called that up. We need to ensure that we implemented pretty much on steroids.
Though the institutes in Tier 2, Tier 3 cities are able to adapt much faster, they’re able to change much faster. But the industry connections have to be made.
Q: I think you said recently that the obvious solution to the talent crisis in India is women. There was a statistic that said there are at least 10 million women who are qualified, who have work experience, who have dropped out. So are companies doing enough to bring them back?
A: We’ve seen a significant increase in efforts to get women back, including flexibility. And, this whole remote working or hybrid work is helping to an extent because you can give them flexibility. But then again, I keep telling companies don’t make the mistake of assuming just because it’s a woman, she would prefer to work from home.
So I think what we have to do is give them the choice. And to me, that’s the beauty of the hybrid model, it’s about choice. It’s about the choice on whether you work from home or you work from the office and how do you balance both out both for companies and employees?
So yes, I do see companies doing a lot in terms of figuring out how to build more flexibility into the system. I think the Gig economy once we embrace it, and once we make it part of how we work does the formal playbook of the IT industry will actually offer women a lot more opportunities. I think if you’re serious about Tier 2, Tier 3 cities expansion that again, will open the door to a lot of women.
Q: When do you see the war for talent, climbing attrition rates moderating for the industry? When will things start getting better?
A: One is until and unless we are able to do — one where we are able to grow the overall digital skills pool, or we are able to grow or increase some level of employability in the fresher talent.
For example, what are companies looking for? They’re looking for a very strong foundation, when especially when it comes to analytics, cybersecurity, cloud. These are some of the key technologies where you must have a strong foundation. And they are looking for learnability.
Now if we can just focus on these 3 things and build these 3 things in our higher educational institutes, I do believe we can increase the fresher, the talent significantly, or the pool of talent available significantly which will help. But all that said and done in fact we were just talking to a few of the HR heads this week. And the chaos and the craziness are slowly stabilising. It was at its peak last month. Because everybody is realising you can be part of the game but that game is not sustainable.
So I think hopefully in a few months while talent will still be in shortage, but we will see some sanity come back to the system.
Q: Because of this digital transformation that you mentioned, can you take us through what kind of new roles are being created for the industry which perhaps was not there say a year or a year and a half before?
A: A classic one is with what is the hottest skill requirement or our where do you have the maximum premium in data science today? Storytelling.
You need data scientists who are brilliant storytellers because the data is useless unless you can reinvent the users to use the insights and communicate the insights in such a compelling way that your customers will see value in it.
So data into value — the person that converts the data into value has to be a brilliant storyteller. So, it is amazing to see how these kinds of roles are coming up based on the needs of the industry.
Q: I also wanted to touch upon the startup and the unicorn boom that we are seeing in India. What do you make of this boom? Is it sustainable?
A: The boom is here to stay, at least for a while. It is definitely here to stay, especially with what’s happening in China. The global investors are looking for a safer, promising market to bet on. And India meets all the criteria today. We have the innovation ecosystem, we have consumption market. I mean, all we have, a stable government. So sort of all the checks are there.
So I absolutely believe that the boom is here to stay. You can’t predict beyond 3-5 years in our world, and I never do. But at least for the next 3 to 5 years.
I think October is going to be a month for IPOs. We are going to see tons of them out there. I think this is going to bring back a lot of discipline into the ecosystem, about ensuring that you definitely have a roadmap to profitability. Because while the market is absolutely betting on you right now, all the ventures, they’re betting on potential, they’re betting on innovation, et cetera. But once you go public, after some point the same market will start demanding the numbers. They would start demanding the profits. So I think it’s actually a very good thing.Internet Explorer Channel Network