Likely rise in IT spend positive sign
Tata Group's flagship IT services company Tata Consultancy Services (TCS) has surpassed global IT firm Accenture to emerge as the most valuable information technology firm in the world again. While TCS' market valuation stood at $169.25 billion at Monday's close of trade, Accenture's m-cap was at $168.68 billion.
This is heartening news for the Indian IT industry. Currently, four Indian IT services companies figure in the top 10 m-cap league globally. Apart from TCS at the top, India's second-largest IT company Infosys is the fifth most valuable IT services firm globally with an m-cap of $77.3 billion.
Similarly, HCL Technologies is at the number seven position with a valuation of $35.25 billion, followed by Wipro at the eighth position with an m-cap of $34.15 billion. With such a stellar line-up, India can take pride in being the IT capital of the world.
Such an order of valuation has come at a time when global consultancy firm Gartner comes up with the forecast that global IT spending is expected to increase by 6.2 per cent in 2021 to reach $3.9 trillion as compared to a contraction of 3.2 per cent in 2020. Businesses are prioritising digital initiatives that are directly related to enhancing their customer engagement with a shorter return-on-investment window, the consultancy firm said.
Even India as geography is fast catching up with enterprises increasing IT spends. Gartner projects India's spend on information technology (IT) likely to reach $88.8 billion in 2021, up 6.8 per cent from 2020. In 2020, IT spending has declined 2.7 per cent as CIOs prioritised spending on technology and services that were deemed mission-critical during the initial stages of the pandemic.
However, the rise in demand scenario across segments will fuel the overall IT spending in India this year. The consultancy major in its report also stated that businesses will have to push their plans for digital expansion by five years to tackle the Covid-19 impact.
When the IT spend is set to rise this year, Indian IT services firms are in a sweet spot to clinch more outsourcing deals. Even Indian enterprises are likely to give more work to domestic firms. In this perspective, the m-cap of the Indian IT pack is expected to do well this year if the domestic IT firms play their cards well.
With this year's Budget around the corner, Centre can look at the provision to sustain this growth trajectory. Tax incentives, clarity on 'intermediary services', and special provision of funds for digital initiatives are some of the aspects that the Budget can look into.
Apart from global IT biggies, India is home to many technology-based startups that are coming up with innovative solutions to India-specific problems. Indian IT biggies should handhold these startups to make the country an innovation hub in the coming decade.
That will help the Indian IT companies grow bigger and garner a higher pie of the global IT spend. That will lead to more revenues from IT companies and more IT jobs in the country.