IT stocks have been the big gainers in the past few days on the back of good earnings. IDC India has written an interesting note on the IT sector, where they expect global spending to grow at a CAGR of around 4 percent over the next five years.
CNBC-TV18 spoke to Sharath Srinivasamurthy, Research Director for Enterprise Solutions & ICT practices at IDC India.
Srinivasamurthy said, “We are seeing a massive shift in the way IT sector is shaping up. Infact, the industry is not the same anymore that it was a couple of decades ago. There is a massive shift in terms of technologies that have come to the market in the last 5-10 years. The software, the tools, that were being used a decade ago are no longer relevant.”
On IT services spend, he said, “When I say IT services spending will be around 4 percent, that includes both the spending on in-house as well as outsourcing services. IT services spend was higher in 2020 and in 2021. It is going to be more as well in 2022, and if you look at it over a period of 5 years on an average, we would look at a 4 percent growth including both insourced projects as well as outsourced projects.”
On attrition rates, Srinivasamurthy said, “There are a lot of realignments going on in terms of talent strategy, and as people say there is a massive war for digital talent in the market. Companies are investing more on acquiring new talent and that comes at a price. So, we have seen massive attrition as well. We have seen double digit attrition and I am not surprised. It is going to continue so there is a war for digital talent and you will have to pay for digital skills.”
He added, “I feel that in next one or two years, things would actually settle down and these are investments being made in technology talents that are going to yield better results in future.”
On deal wins, he said, “Traditionally Indian IT services firms have not been very aggressive in terms of acquisitions. But in the last 1.5 to 2 years, we have seen acquisitions coming in and we saw these acquisitions in 2021, and it will continue in 2022 as well.”
“If we look at types of deals in the market, there are clear sweet spots for both larger firms as well as mid-sized firms. The trend that we are seeing is large IT firms are wining deals in the range of total contract value $ 10-100 million and the mid-sized IT firms are looking at deals in the range of $1-25 million TCV.”
For full interview, watch accompanying video.