The Covid-19 pandemic that started in March has claimed millions of lives and led to huge loss. The IT companies and tech jobs have also been badly affected because of this. But definitely the governments around the world have planned various strategies to bring things back to normal. One is the IT outsourcing which will largely benefit the IT companies and tech jobs in India. Goldman Sachs has recently stated that the IT services companies of India have been positioned in a proper way so that they can earn a huge benefit from the third wave of IT outsourcing after the previous ones in the year 2000 post Y2K and the next one in 2008-09 post Global Financial Crisis.
After properly looking at the estimates in the increase rate of Global/US GDP, Goldman Sachs said that they have increased their FY22E-23E sector revenue and the present forecast is around 12.6% US dollar growth in revenue of FY22E among the top five Indian IT firms. There has always been an increase in outsourcing at the time of crisis in India that also went through lower wage levels for technology developers in comparison to Developed Markets despite an increase in the annual base of those who graduated in engineering. Similar wave came in the year 2000 after the Y2K issue when the IT industry of India was growing at a rate of around 40% and low global penetration mainly because of labour cost arbitrage.
The second wave which came in 2008-09 after GFC when the IT industry was growing at a rate of around 15% for three to four years before it changed to single digit growth. This was because of the use of automation tools which forced the IT firms to look for other solutions for selling IT solutions and shifting to business transformation from labour cost arbitrage. Post Covid-19, it is being expected that the third wave of outsourcing and the increased roles of technology finds the way to India. A large number of firms have decided that few of their employees permanently get to work from home and recently McKinsey stated that a few IT contracts planned to engage around 75% employees to work from home. According to reports, TCS and TechM has decided to engage 75% and 25-30% of their employees to work from home by 2021 and 2025. Employees who are expert in digital medium have grown to around 37% CAGR FY17-FY19 which has made India the largest beneficiary under the norm of Work from Anywhere.
Thank you for your insight. We are already seeing significant growth in enquiries here at ESG Global Services (www.esgglobalservices.com) in Mumbai, mostly asking to take over the remote working that companies in UK, US etc have been indulging in over the last 4-5 months.