An exciting future ahead for IT Companies.

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 An exciting future ahead for IT Companies.

 


We observe that technological evolution has been taking place with rapid pace amid Covid-19 pandemic. The pandemic has accelerated digital transformation journey of many countries. As a result, we are witnessing digital transition with unprecedented pace. Socially distanced culture and repeated lock down due to increase in Coronavirus cases all over the world have forced everyone to adopt more tech enabled tools for survival. The entire world is now looking for more Automization & Robotic Techniques, e-commerce, e-education, virtual meetings and tele-health services. As a result, we are seeing a manifold increase in demand for tech enabled services. Over the next decade, Digital economy in the US is set to grow to 10 percent of the US' GDP. This would create great opportunity for Indian IT firms, driven by automation, cloud, digital transformation and consumer experience.  IT services spending is expected to increase to 6-8 percent between 2021 and 2024 from 4-5 percent now.  TCS and Infosys will be front runners when it comes to winning transformation deals. Even other companies are likely to get benefit of this as investment in technology by companies across sectors (from retail to healthcare), will result in immense opportunities for IT services companies.

Main driver of growth will be cloud enabled services. As per estimate, the cloud consulting and managed services are expected to reach $240 billion from current $60 billion over the next three to four years. The cloud hyperscalers such as Amazon Web Services, Microsoft Azure and Google Cloud are seeing accelerated spending, though the same growth cannot be linked to IT services. The surge post Covid-19 can create new opportunities in IT space in a great way though not of the scale witnessed with cloud hyperscalers,

The next area is customer experience. Post Covid-19, online penetration in some of the countries has been pulled forward by at least 5-10 years resulting in pushing the demand for IT service providers. Automation, contact less services and telehealth are the other sectors which are also expected to grow with rapid pace. Therefore, the IT firms are now best positioned to reap the benefit arising out of COVID-19 pandemic.  Moreover, as per a report, Top five US banks’ technology investment increased to 7 percent for the quarter ending June 2020 compared to 5 percent in the previous quarter. Expert opinions suggest that this trend of increase in IT spending is likely to sustain for the rest of the year.



Looking at the trend, investment in technology companies is strongly recommended and we can expect a decent return in this sector for the whole decade. Despite all these positive future prospects, the question is, will we see IT companies emerge as more than service companies in the post pandemic world. If they want to, there is no better time than now.


      


- Rajendra Jhanwar

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