Despite revenue of more than $100 billion in 2011-12 and an aggressive growth expectation of more than 13% in 2012-13

from NASSCOM, Indian IT industry is facing several challenges: The rapid expansion of the Indian IT industry has been a key feature of economic development in India and also worldwide. The Indian IT industry has become a main source for export earnings and also a key driver in the transformation of the domestic economy. India has emerged as a major center for offshoring of IT services. The pace of export revenue growth of Indian software companies will moderate next fiscal year amid continued global economic uncertainty. The EU is Indias second largest trading partner so the Eurozone crisis is bound to affect the Indian economy. The Indian IT industry, however, continue to face multiple challenges such as the need to respond quickly to changes in technology and demand. This is illustrated by the fact that the IT industry in India went through a radical transformation in the 1990s and the 2000s and is poised to be reshaped again in the 2010s. One of the major challenges for the Indian information technology industry was to keep maintaining its excellent performance standards. Export is another key area where certain things need to be done in order to make sure that India can maintain its status as one of the leading IT enabled services destinations of the world. A step that needs to be taken is to create an environment for innovation that could protect the industry for a longer period. These innovations need to be done in business models, ecosystems and knowledge. The IT industry of India also has to look at the opportunities in other countries and spread the range of its activities. The Indian IT industry also needs to co-ordinate with the business and strategy advisory circles as well as other industries in India for better performance and improved productivity. According to PAC (Pierre Audoin Consultant) the business process outsourcing service providers in India need to change their operations to a way that is more oriented to the knowledge process outsourcing. One of the most important crises facing the Indian IT industry concerns the human resources aspect. The problems with outsourcing in countries like the USA are posing problems for the Indian information technology industry as well. In the recent times a bill has been passed in the state of New Jersey that allows only the citizens or legal non-Americans to be given contracts. This legislation has also affected some other states in the USA. These states are also supposed to be considering these laws and their implementation. This is supposed to have an adverse effect on the outsourcing that is the source upon which the IT industry of India thrives. The information technology professionals who aim at working in the country are also likely to be delayed by the legislation as a significant amount of these professionals have been going to work in the USA for a long time. Finally, the quality of technical education in India leaves much to be considered necessary. For the Indian IT industry to increase the size of the global IT pie, it must move from being a mechanical problem-solver

to a proactive problem-definer. To do this, NASSCOM alone can bring the engineering and business schools of India and overseas on to a common platform, in conjunction with the education and IT ministries of India, to renovate the curriculum to meet this need of tomorrow.

ailing through the choppy business environment and gloomy global market conditions, revenues for Indian information technology (IT) and business process outsourcing (BPO) services companies will cross $100 billion mark this financial year. However, the same pace of growth is unlikely to continue in FY13 with the current political and economic uncertainties acting as the dampener, according to Nasscom.

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The apex body of Indian technology companies has forecast a slowdown in software exports in 2012-13 compared to 2011-2012. In FY13, the IT and BPO export revenues is expected to grow at 11-14 per cent, while the domestic revenues are slated to grow by 13-16 per cent, according to Nasscom projection. The silver lining is, despite the challenges in the global market conditions, Indian IT-ITeS (IT enabled services) sector sustained its growth trajectory and met the revenue guidance given by Nasscom last year. India's IT services and BPO exports were predicted to grow 16-18 per cent in 2011-12 to $70 billion.

KEY HIGHLIGHTS * In 2012-13, export revenues are expected to grow by 11-14% and domestic market by 13-16% * Indian IT-BPO revenue estimated to cross $100 million in 201112 * In 2011-12, exports are expected to be at $69 bn and domestic

market at $32 bn * Technology spends are expected to grow over 4% * Indias share in global sourcing was at 58% in 2011, up from 55% in 2010 * The industry expected to employ over 200,000 employees in 2012-13; currently employing over 2.8 million professional, with over 2,30,000 jobs being added in 2011-12
In its strategic review for 2012, Nasscom estimated the software services and BPO revenues of Indian companies are likely to cross $101 billion this year. Of this, about $69 billion will come from exports, a growth of 16.3 per cent growth over the previous financial year. The domestic IT services revenues expected to grow at 16.7 per cent in year 2012 at $32 billion. The growth was driven by a number of factors such as new business models, services around disruptive technologies such as cloud, mobility, analytics, social media, and verticalised solutions, said Nasscom. The industry body also said that Indias share of global sourcing increased to 58 per cent in 2011 from 55 per cent in 2010. The three per cent increase in the global share indicates that India retained its number one position as the worlds leading outsourcing destination for IT-BPO services. According to Nasscom Chairman Rajendra Pawar, FY13 outlook would be revised further in October, this year. "We will revisit this forecast in October. The mood is worse than the actual business. The current uncertainties are forcing us not to look at the whole year. The environment is still foggy." This is for the first time Nasscom is going to have a mid-year review of its guidance. There will be short-term ups and down, Nasscom president Som Mittal said, adding on the long-term, the industry is on track. The industry can meet the vision 2020 target of touching $225 billion by 2020. On the challenges for the industry in FY13, Nasscom whos members includes TCS, Infosys, Wipro, NIIT and others, said a variety of factors such as the elections in the US, leadership changes in euro zone and India's own policy paralysis can act as headwinds. "There is policy paralysis in India. There is no road map on direct taxes code, goods and services tax and SEZ issues. Also there is increased tax activism," Mittal said, adding that in the Budget he expects some of these issues to be resolved. On the political front, Mittal said, Elections in key markets such as the US, France, Russia, and protectionist sentiments and election rhetoric are concerns. Moreover, the wide spread media debate on the euro crisis is affecting business sentiment. Giving the hiring outlook, Nasscom said there was a strong hiring pipeline of over 100,000 offers. The industry created over 230,000 jobs in fiscal 2012. The IT and BPO industry in India currently employs about 2.8 million people. On the salary hike front, Nasscom said the wage increase could be in the range of 8-10 per cent in 2012-13 as compared to 10-14 per cent in the current year. For the year ahead, global technology spending is estimated to grow 4.5 per cent, which is a good sign.

BANGALORE: The software industry in India's technology capital, which has been a beneficiary of benign government neglect, is concerned that the malevolent gaze of arcane rules and regulations may be falling upon it. Employers in Bangalore, home to some of the world's most prominent software companies, are worried that a law made applicable to IT companies starting this year has the potential to cause them severe headaches at a time the young industry is going through its worst phase. IT companies have enjoyed exemption from this archaic law - the Industrial Employment (Standing Orders) Act, 1946 - for more than a decade. "This is a retrograde step. This law belongs to the 19th century and does not take into account the ground realities of a globalised world," said industry veteran TV Mohandas Pai, a former member of Infosys' leadership team who was instrumental in getting the earlier exemption. "Originally, the exemption was secured to stop harassment from the labour department and the inspector raj." IT companies worry they will be made to comply with what they believe are complicated and unnecessary procedures, be exposed to 'inspector raj', and end up encouraging union activity in a sector that has been largely free of labour groupings. The law mandates companies to "define with sufficient precision the conditions of employment" and make these conditions known to employees by posting them "on special boards to be maintained for the purpose at or near the entrance through which the majority of the workmen enter the industrial establishment". Moreover, these so-called "standing orders" must be approved by labour unions or staff representatives. This, companies fear, could be an invitation of unionisation. "It will only encourage non-performing employees to cite the law in order to create the scope for a preventable unionised approach. We are part of the IT industry and like every organisation in our industry, we have formulated our own working norms, guidelines and practices which are based on the spirit and purpose of fulfilling more than what the law is meant for," a spokesman for mid-sized IT company Infinite Computer Solutions said. Exemption from the standing orders was a carrot that the government used to attract investment from Indian and multinational software companies, which now employ more than a million professionals in Bangalore alone. The software industry is the fastest-growing segment of Karnataka's economy and contributes to nearly a quarter of the state's GDP. Software exports from Karnataka make up over a third of total software exports from India

and in 2011-12, Karnataka exported Rs 1.3 lakh crore worth of software services. Smaller and mid-sized IT companies are the ones that are beginning to see the effects of the exemption end right now as they are being contacted by the labour department for certification of standing orders. Many of them were not even aware of the changed circumstances. Infosys and Wipro, the country's second- and third-largest software exporters, declined to comment for this story. Software and services industry grouping Nasscom, which said it expected continued exemption from the law, expressed "concern" and said the industry has ensured a "selfcertification process" to comply with all laws, including labour laws. To comply with the standing orders, companies must disclose details, including working hours, shifts, job cuts, wages, leave and attendance, grounds for termination and definition of misconduct to the authorities. "The standing orders were made for labour-intensive industries in manufacturing, but IT works in a very different fashion. We have different definitions for employees on the bench, contract employees, temporary staffing etc. Today, when we are typically working with a 3040% bench having no project for 3-4 months, it will be very difficult to operate in a free manner," Rai of Mindteck said. But Karthik Sekhar, general secretary at the UNITES Professionals association of software employees, said the law will curb what he called "unfair practices" by employers. SR Umashankar, Karnataka's labour commissioner, said the decision to rescind the exemption was made in response to an outcry from employees. Just last year, he said the government received some 1,000 complaints regarding unreasonable termination, overtime or sexual harassment. "Compliance with the law will bring in greater accountability," he said.

IT companies struggle with growing benches

BANGALORE: Ketan Jalan joined a top-tier IT company in July last year, immediately after his engineering degree. It's one year now, and he has not worked on a single project yet. He still goes to office every day. He went through a Java certification training. He's now registered for an Oracle course. But the training courses don't take much time. He spends most of his "working hours" Googling, playing or in the cafe. "It's boring," he says. But that may be understating the problem. It's also not good for his career, because he has no work experience to show for himself. And work experience is what matters most in salary increases and promotions. There are many like Jalan, because IT companies failed to anticipate the sudden drop in demand on account of the global economic slowdown over the last year. Some employees are even allowed to stay at home. "It's making me mad. Now I'm scared I might be laid off," says another young techie who has been on what IT companies call "the bench" for close to five months now. A bench, up to a point, is a necessary evil. Even though these employees don't earn anything for the company, there will inevitably be a bench formed by employees who would have just completed a project and would not have another to immediately work on. A bench is also neededas a strategyto quickly get a project going when the company receives an order (a client will not accept a situation where his work cannot be immediately implemented). It's like a manufacturing company that keeps investing to ensure there's always some excess factory capacity that can be used when an order suddenly flows in. In normal times, IT companies have about 20% of their employee base on the bench. But as of the quarter ended March, the employee utilization rate (which is the opposite of the bench proportion) had fallen to about 67% for many, including Infosys, Wipro and MindTree which means some 33% of their employees were on the bench. Considering that Infosys has 1.5 lakh employees, nearly 50,000 today are not earning any revenue for the company. For TCS and iGate, the utilization rate has dropped by about 4 percentage points over the last one year. "There are companies with a bench size of up to 40% today,'' says an HR professional at a tier-1 IT firm who did not want to be named. Nirupama VG, MD of HR consultancy Ad Astra, says the bench size has gone up for many companies by 10 to 15 percentage points. C Mahalingam, HR head at software product engineering services company Symphony Services, says the churn duration (the time an employee spends between completing one project and getting into another) used to be 45 to 60 days, but with opportunities dwindling, the duration is getting longer. "This opens up a huge resource management challenge and is the biggest concern for HR managers today,'' he says.

Companies are reacting to the bench problem in multiple ways. Infosys Technologies has said it will delay the joining dates of the freshers it hired this year, some of them to as late as mid-2013. iGate has said it will delay the joining by one to two quarters. Many others are said to be taking similar measures. Most are reducing the extent of hiring they are doing this year. "Companies also handle benches by increasing the training period and using them for internal projects," says Navin Kumar, CEO of IT skills development firm iPrimed.

ANGALORE: Roughly 100,000 revenue-earning employees are estimated to have turned into unbilled 'benched' talent in the past year alone, according to sources from the IT industry and placement firms. 'Utilisation rates' in some leading IT firms have dipped below 70% and an estimated 3.25 lakh of the 1.3-million strong IT workforce are now idle. But unlike in the last slowdown, IT firms are now walking the extra mile to keep the 'benched workforce' engaged, even as they seek to balance P&L pressures and talent management compulsions. Last quarter, Infosys rolled out Pathfinder Next, an initiative where staff on bench can work on internal projects and assignments, and have access to technology, business domains and other service lines. "Through the programme, employees get job enrichment, vertical and lateral career exposure and access to opportunities," a company spokesperson said. Infosys had also launched SmartStaffing, a portal specifically created for those on the bench, in February. It enables employees not working on any project to reach out directly to delivery managers and designated unit talent managers and apply for any of the requirements that are vacant. Infy's utilisation dipped from 69% to 68% in the past year, but it expects the figure to improve to 69-71% in the coming quarters. Sharp focus on benched employees "We are doing not one but many things (to boost employee morale during this period) and do not expect any spike in attrition in the next few quarters," Infosys CEO SD Shibulal said after the firm announced its first quarter results last week. Those on Wipro's bench are using idle time to learn newer soft skills, plug into more management gyaan or learn new languages such as French and German, a company executive said. Anyone can apply for these courses under Wipro's Open Enrolment programme. TCS, which boasts of a utilisation rate of 82%, uses its bench to test prototypes of new technologies that have been developed internally besides getting them trained for upcoming projects.

Rather than relegate unbilled resources to a nondescript corner, iGate is getting them to work on pilots of key internal projects that can transform company strategy. With a utilisation rate of 77%, the California-based IT company-which employs over 10,000 in India-wants to use its bench strength to prevent layoffs. Those on the bench work on proof of concepts and internal automation tools. Managers are supposed to hold regular meetings and include all in project-specific meetings, reviews and other forms of communication. iGate also trains unbilled resources on a new solution called Integrated Technology and Operations ( iTOPS), which is expected to make them project-ready. This is the second time the Indian IT industry is coping with declining utilisation rates; but it is perhaps the first time it has shown a razor sharp focus on making benched resources more productive and keeping them engaged. "Until a few years ago, companies would leave those on the bench alone," says P Thiruvengadam, senior director, Deloitte India. "But now they have become more organised and a lot of them are involved in preparing training modules, mock projects, learning about different projects, pre-sales activities, etc." Learning from the past The first time utilisation rates dipped was during the 2008 slowdown after Lehman's collapse. Industry growth rates soon slipped to single digits, layoffs were not uncommon and morale was low. Many on the bench quit as the first opportunity came along. But later, in 2010, when demand for IT rebounded, companies couldn't replenish talent fast enough and cheap enough. The top tech firms were forced to go for lateral hiring, which sent their costs in a dizzy. But now, having learnt the lesson from the last slowdown, IT firms are walking the extra mile to keep idle resources on the bench engaged and loyal. "Compared to 2008-09, things look much better this time," said Ankita Somani, IT analyst for Angel Broking. This time around, companies are also taking extra care of campus hires. "First-timers need special attention; (older) employees without projects get involved in other things," said Parthasarathy NS, chief operating officer at MindTree. The company's utilisation rate is around 69%, though the ideal range, according to its COO, should be 70-72%. More such initiatives are being rolled out across the industry. Consulting and IT services provider UST Global, for instance, has assigned top-level managers to set up one-on-one meetings with employees not working on any project. In the past one year, UST's bench size has gone up from 6-7% to 10%. The top brass has been told to keep communication flowing to those on the bench and to answer questions about the company, business environment, client requirements, etc.

UST, which employs close to 10,000 in India, also has an innovation lab called Apple Tree, where employees can conduct experiments and come up with scientific innovations. "People on the bench are asked to come to office everyday and be a part of this," says UST's global HR head Niketh Sundar. "If they aren't working on any projects and are not part of any training, we give them other duties". For instance, some have been pulled into UST Global foundation week celebrations. But recruiters say such measures may be inadequate. Attrition is low only because there is no place to go, and once markets open up, these efforts may not keep them back. "If the skill sets learnt (by those on the bench) are niche, they aid the employee in climbing the hierarchy," said Sangeeta Lala, VP and co-founder of staffing firm TeamLease. "But it works only for the junior management and will not be sustainable if the bench grows." "It can be a very frustrating phase, to be on the bench," said Rajesh S (name changed), an ex-employee of a large MNC IT services firm. He was on the bench since April. Rajesh attended knowledge-sharing workshops and in-depth discussions called 'know your industry'. He sat through training programmes on people management once a week for two hours. Resource deployment managers would also get in touch with him frequently. But Rajesh still found it hard to stay benched. He quit this month.

At present there are a number of challenges that are facing the information technology industry of India. One of the major challenges for the Indian information technology industry was to keep maintaining its excellent performance standards. The experts are however of the opinion that there are certain things that need to be done in order to make sure that India can maintain its status as one of the leading information technology destinations of the world. The first step that needs to be taken is to create an environment for innovation that could be carried for a long time. The innovation needs to be done in three areas that are connected to the information technology industry of India such as business models, ecosystems and knowledge. The information technology sector of India also has to spread the range of its activities and also look at the opportunities in other countries.

The improvement however, also needs to be qualitative rather than just being quantitative. The skill level of the information technology professionals is one area that needs improvement and presents a considerable amount of challenge before the Indian information technology industry. The Indian information technology industry also needs to co-ordinate with the academic circles as well as other industries in India for better performance and improved productivity. The experts are of the opinion that the business process outsourcing service providers in India need to change their operations to a way that is more oriented to the knowledge process outsourcing. One of the most important crises facing the Indian information technology industry concerns the human resources aspect. The problems with outsourcing in countries like the United States of America are posing problems for the Indian information technology industry as well. In the recent times a bill has been passed in the state of New Jersey that allows only the citizens or legal non-Americans to be given contracts. This legislation has also affected some other states like Missouri, Connecticut, Wisconsin and Maryland. These states are also supposed to be considering these laws and their implementation. This is supposed to have an adverse effect on the outsourcing that is the source upon which the information technology industry of India thrives. The information technology professionals who aim at working in the country are also likely to be hindered by the legislation as a significant amount of these professionals have been going to work in the USA for a long time.