Indian IT service providers won’t have a breezy 2024

livemint.com:

Wipro are muted. Secular growth is on the wane and the companies have been talking about low visibility on top-line growth. Their share prices are off their peaks by between 10% and almost 40% as I write this.

These firms spent much of the pandemic pushing up their labour costs by poaching each other’s mid-level staff, which led to a hiring bubble that has burst. Now, they are squabbling over senior employees moving from one to another. Rumour has it that “cease and desist" letters have been sent out and some of those who jumped ship have also received such missives.

A few weeks ago, I wrote about how Indian IT firms have stuck with their ‘paisa vasool’ (value for money) model by trying to offer services cheaper than their foreign competition, and that this model is in danger of being upended by IT firms such as Accenture, which have clearly been more adroit in responding to recent changes, starting with the ‘digital’ wave of SMAC (Social, Mobile, Analytics and Cloud). Accenture’s Song business unit, which by itself is as large as Infosys with revenues of $18 billion (bit.ly/48N5J39), should give Indian firms something to think about. Song’s success is remarkable because it is a ‘marketing creative’ business bolted together by over 40 acquisitions to offer the tech support needed for product design, creative work, media and marketing strategies, and channel, content and campaign orchestration.

Most of Song’s clients are marketing or business executives, not IT support organizations or units, serving which is the focus of Indian IT players, given their strengths. So the latter are left undercutting each other for work of lower strategic purpose and value. The adoption and integration of cutting-edge technologies like