IT/ITES, one of the fastest growing verticals in India, hit a major roadblock during the recessionary period. Signs of a revival are now visible, but they come at a time when global companies are stuck with limited budgets, thus increasing the demand for outsourced services. According to market research firm IDC India, after witnessing a slowdown in demand in 2009, the domestic IT and ITES market is expected to revive in 2010 and register a growth rate of 15% to touch the Rs 1,20,666 crore revenue mark.
India's IT/ITES industry is considered to be a mature vertical, as far as IT adoption is concerned. However, 2009 was a tough year for CIOs in the IT/ITES industry since IT leaders had to make do with limited budgets and fewer IT projects. "The changes that began last year will take concrete shape in 2010. As the economy recovers, both consumers and enterprises will demand services and solutions that allow them to do more with less," says Kapil Dev Singh, the country manager of IDC India.
So what will be the trends of 2010? Will there still be limited budgets? Or will CIOs heave sighs of relief? We spoke to a few CIOs in the IT/ITES sector to understand their priorities in the new year.
A re-look at IT budgets: As far as the IT budget is concerned, most of the IT/ITES CIOs feel that there will not be any major changes. Business decision-makers will have a cautious approach while drawing up the budget. In 2010, there will be a lot more pressure on the CIO. CIOs and CISOs have learned that they can do more with less without affecting service quality. "In the last one and a half year, CIOs have spent a lot of time cutting costs and trying to optimize their existing infrastructure. The loosening of the purse is again going to be a little slower this year," says Muralidharan Ramachandran, the CIO of Syntel. For Puneet Kohli, the CIO of Soma Networks, reducing operating costs is at the top of her list of priorities for 2010. "This quarter I have planned to decrease operational costs by 25%."
Adds Rajendra Sawant, the CIO of Adventity Global Services, "In 2010, IT budgets will definitely move northward, but not by large margins. The worst is definitely over, and the future is looking very positive for the IT/ITES sector overall."
IT service management: In comparison to other verticals, the ability to adopt and leverage new technology is far ahead in the IT/ITES sector. In that sense, the CIOs in these verticals are already ahead of the times in terms of adopting concepts and technologies such as data centers, network operating centers, and virtualization. "Now the challenge is to effectively manage the existing infrastructure. COBIT and ITIL v3 will definitely be adopted across the vertical. IT service management will be among the major priorities of most companies," forecasts Anwer Bagdadi, independent consultant and former senior vice president of IT at CFC India Services.
Renewed information security focus: The IT/ITES sector has been one of the pioneers in adopting stringent security policies in India. "Ever since the BPO industry came into being, information security has always been one of the priorities. What could have an impact is the ambiguity (and resulting confusion) regarding the Information Technology (Amendment) Act, 2008. Keeping a tab on the latest developments in this act will be crucial. For an IT/ITES company, it is essential to be aware of local as well as foreign laws. Data protection and information security might get more standardized in 2010," says Ramachandran.
Adoption of new technologies: According to Bagdadi, IT/ITES companies adopt technologies when they are stable; they do not go in for bleeding technologies. Hence, despite the tight budgets, CIOs will be seen testing certain new technology advancements.
• Virtualization: Virtualization will be very well adopted in the Indian IT/ITES vertical this year, because CIOs are currently at the tipping point of leveraging the use of existing technology. "Virtualization has been there for a few years, but for the past six months, people are talking about end-to-end virtualization. Major vendors have already started selling their solutions in this area. The development of this technology has happened at the right time," comments Arvind Sood, the chief technology officer of WNS Global Services.
• Cloud computing: The current buzzword is yet to see many takers in the IT/ITES sector, because there are concerns from the technology standpoint as well as from a governance and security point of view. CIOs might start with testing non-core applications, and we might see basic deployments like hosting of email servers. The technology will take some time to mature and grow. Given a choice, CIOs might leverage private clouds as a technology. They would prefer creating a virtual cloud within the enterprise.
• Document services: "(Document composition and document output management) will attract increased attention from vendors as well as customers by integrating document services into existing enterprise content management systems. Examples include electronic billing, statement/policy generation, and presentation," says Sawant.
Apart from these, other technologies such as unified communications and Web 2.0 were among the other priorities of IT/ITES CIOs.
Green IT initiatives: The concept of green IT is at a nascent stage in Indian IT/ITES companies. However, benefits associated with green IT such as reduction in costs and efficiency boost are increasing the interest in green IT adoption. "The way I look at it, optimization and consolidation can reduce my total cost of ownership; one of the components of this is green IT. Technologies such as de-duplication and conserving your storage in turn can also be your green IT initiative," says Ramachandran.
Human resource management: One of the major priorities of 2010 will be human resource management. "If the market opens in 2010, I think we will start losing people, which can change the game entirely. If the CIO is not a great coach or a mentor, he will lose talent. There will be a problem of attrition. A complement to attrition will be outsourcing services. Apart from this, there is a severe need for good project managers," states Bagdadi.
2010 might not come as a major relief to CIOs, but it is definitely promising some new opportunities. Keeping in line with the latest technology trends while always staying within the budget is going to be the major challenge. Thinking out of the box to create sustainable models may help IT/ITES CIOs to overcome it.