IT will drive ahead this year

The Indian IT sector is bullish about 2007. None of the CEOs who spoke to Business Standard was perturbed over the "impending" slowdown in the US, especially since many of them have hedged their bets by either lowering their exposure to the US markets or catering to niche areas that come under the "necessary" tasks.

A few even pointed out this is an "opportunity" for Indian companies.

Moreover, no CEO expected any major disappointments to dampen the New Year sentiment. Nandan M Nilekani, CEO and Managing Director, Infosys Technologies, said: "We are on course to achieve the $3 billion revenue mark this fiscal."

Raj Saraf, chairman and managing director, Zenith, was empathic that "2007 will definitely be more profitable than 2006 since the investments going into new projects should pay off by then".

Ajai Chowdhry, CEO & Chairman, HCL Infosystems, remarked: "The overall ICT market is also expected to maintain its growth rate at around 27 per cent. All key verticals "� including telecom, retail, auto, BFSI and even personal users "� are planning key growth investments, including consolidating their ICT infrastructure. With the government's mega plans for e-governance also taking shape, the coming year definitely looks interesting and profitable."

Suresh Senapaty, Chief Finance Officer, Wipro, concurred: "All our businesses are demonstrating strong traction in the market-place and are growing ahead of Industry. Overall, we feel optimistic and confident about our profit growth for 2007."

Aftek Infosys, MD, Ranjit Dhuru, said: "I think India is poised for a good future, and 2007 would emerge as the year for the country. I don't expect a slowdown. India is on an acquisition spree and this will continue in 2007 also."

Wipro's Senapaty added he did not see any indication from clients on cutting IT budgets next year.

"Also, a slowdown is also not a negative on the business as most global organisations see outsourcing to India as a great opportunity to remain competitive in difficult times. Our ongoing discussions with clients give us confidence that India is a critical part of their IT strategy," he opined.

Some CEOs, however, were cautious about the hardening of the interest rates but expect India to be on the reforms' path. Ramalinga Raju, Chairman, Satyam group, said: "We have already seen significant reforms in the retail, telecom and insurance sectors in the past year and expect this trend to continue. The pace of reforms may accelerate or decelerate based on various economic and political factors."

W S Mukund, Managing Director of Acer, pitched in: "All pointers are towards increased pace of reforms in the stated areas. The only imponderable is the political compulsions from the other alliance parties which could force some soft-pedalling in the areas of pension and retail."

And will companies look out for more overseas acquisitions in 2007? Loney Antony, MD (India) Euronet, said: "I believe there won't be big acquisitions happening in 2007, as the banking sectors, the prime lenders, need to open. This would take sometime, and will open up by the end of 2008 or 2009. Small and medium acquisitions would continue in the country, even as there would be significant talks in that direction."

Wipro follows what is popularly known as 'Strings of Pearls' strategy for inorganic growth. "Our strategy focuses on identifying specific gaps in our services, geo or skill-sets and filling those gaps through focused acquisitions in that space," explains Senapaty. B Ramaswamy, President and MD, Sonata Software, said: "We will be on the look out for interesting opportunities which will provide a good strategic fit."

And what do you think will be the biggest constraint to your growth/expansion in 2007, we asked the CEOs.

"Much like most industries it is the lack of proper infrastructure. In the area of IT it is more acute since to enable higher penetration in C&D class towns, the basics of reliable power, accessibility, quality manpower and awareness. This could pose a serious threat for IT becoming pervasive and thus crippling the multiplier benefits that a more IT enabled society could enjoy," said Mukund. Chowdhry put it on the "availability of right people for the jobs". Senapaty noted that Wipro hired nearly 16,000 employees (on gross basis) in 2005-06 and for the first half of 2006-07, "we have already added close to 11,500 (on gross basis). The challenge is really to enculturise such large hires".