As an indicator towards the pragmatic outlook that the industry in general bears as it emerges from a global downturn, 54% of CEOs surveyed by Deloitte across APAC region predict strong growth this year, and a majority of these optimists are from India and China. The CEO survey was held in conjunction with the Deloitte India Technology Fast 50 and Deloitte APAC Technology Fast 500 events in 2010. The Deloitte Technology Fast awards programmes rank the fastest growing technology companies across different regions based on their percentage revenue growth over the last three financial years. In India these events are organized by Deloitte Touche Tohmatsu India Private Limited
Of the total CEOs surveyed in APAC, nearly half have expressed that their companies have experienced overall growth in their focus markets whereas the corresponding growth number of the CEOs surveyed in India is 60%.Though the market has gradually emerged from the shadows of the downturn, the growth has been gradual. The overall mood if we can sum up among the CEOs is optimistic but still cautious.
Most of the CEOs believe that a strong offering and sustained innovation are the keys to growth. This is corroborated by the fact that the sustained growth witnessed by the Indian IT/ITES sector as per the CEOs is due to the fact that these companies are transforming themselves from merely being outsourced service providers to IP-led businesses over the last few years.
A paradigm shift in technology is already in the offering. Of the APAC CEOs surveyed, nearly half of them (44%) believe that availability of cloud-based services has aided the company in terms of scale up quickly and/or at a lower cost. “One of the most significant trend visible was the impact of cloud computing, which started shifting the fundamental business model of delivering and consuming IT services away from infrastructure-based computing. This trend is capturing the fancy of Indian customers and vendors alike, as the domestic SMB segment have been reluctant towards technology adoption due to cost and scale issues.” says P.N. Sudarshan, Senior Director, Deloitte Tohmatsu India Private Ltd.
The strength of Indian software industry especially ITO vis-à-vis other sectors is clearly noticed in the results that have come up in the Fast 500 event. While in the APAC Fast 500 rankings, IT and ITES companies constitute about 30% of the winners, this segment accounts for about 66% of the winners in the India Fast 50 rankings. But India’s contribution in other sectors especially Biotech and Semiconductor have a long way to go before they catch up with the other APAC countries, especially China.
In the coming 12 months, the CEOs across the geographies believe that overall economic recovery, growth of specific market segments and geographic expansion will pump the growth engine. There is a fair bit of consensus that Finance and Operations oriented parameters like rising input cost, limited availability of talent and rising cost of capital will exert downward pressure on the industry. For CEOs in India, talent is a major concern. Just over half note the falling availability of qualified recruits will negatively impact their company’s growth outlook.
Distinctions within APAC were more apparent in 2010 compared to the past, with India and China presenting unique patterns of growth, challenges and opportunities. Of the companies experiencing overall growth in their markets, 70 per cent hailed from India and China.
With India contributing 60 companies to the Fast 500 Winners list and with quite a few of them being repeat winners, Indian technology companies have displayed a growth momentum that is expected to sustain.