As the Indian IT sector goes through a slowdown, an IT industry veteran says that the outlook for 2024 remains cautious and things will turn for the better in 2025
The year 2023 was a momentous one for the IT sector, as the industry endured several shake-ups from geopolitical tensions, which impacted the main markets for Indian IT services – primarily the US and Western Europe, to companies building their offerings for which the customers are not yet ready.
“We are cautious about 2024. Hopefully, by 2025, we should start looking up. The geopolitical scenario should resolve itself. The second thing on IT services is the entry of AI. Most companies have done the work, they are building that into their offerings but all customers are not yet ready. There is a lot of talk, a lot of buzz. Accenture was very quick off the block with AI but their results were not great,” Saurabh Srivastava, co-founder, Indian Angel Network, a platform for seed and early-stage investing, told Moneycontrol.
The ongoing geopolitical situation is squeezing budgets, he added. “We have seen this before. Generally, I find that Indian IT services companies pick up before their global counterparts because they have more reserves. Most IT companies are very healthy on their balance sheets.”
Layoffs in tech and where are the jobs?
According to reports, the tech sector overall has witnessed huge layoffs, affecting around two lakh people in 2023. Some of the reasons cited for that are economic slowdown and widespread adoption of AI.
Srivastava said that while the IT sector could look at cost management, Indian IT does not resort to massive layoffs and are generally more mindful of cost as compared to their European counterparts.
“When slowdown ends.. they are ready to take the upside. They don’t have to get ready to take advantage of the winds.”
In terms of job creation, Srivastava said that one measure to see among IT services companies is their revenue per employee. “And for a long time, it has become less and less linear. Companies are building tools, platforms, products, there is a lot of re-skilling happening.”
On the debate on whether AI will take away jobs or generate jobs, he said that one needs to take a wider view. “It wasn’t long ago that the government believed that automation would lead to fewer jobs... there were similar fears during the industrial revolution. History will tell you it’s a fear that has never been realised. You will have more jobs but different jobs.”
“The Indian IT industry will keep hiring but how much it hires that rate might go down –as revenue per employee goes up, more efficiency comes in, that will happen. But there is a need for all those people in tech start-ups. Every start-up is tech driven, so they need tech people. In the end, a start-up ecosystem will create more jobs than just one IT major.”
You can watch the full conversation with Saurabh Srivastava here.
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