The increased spending on digital technologies and transformation across industries will benefit the Information Technology giants in India like TCS and Infosys and others. The report by Kotak Securities said that opinions coming in from firms across the globe hint at either continued or higher expenditure on transformation which will lead to an acceleration in IT services spending, brokerage and research firm. The report also adds that opportunities range from workplace management to boosting customer experience and digital security.
The IT services companies have already proved strong order pipelines with deals of different sizes. During the pandemic situation, the retailers with better e-commerce presence have fared more effective, which will push these firms towards creating better Omni channel capabilities. The comments from Home Depot, Marks & Spencer, Kohl’s, and Lowe’s indicate that their customers progressively took to their online channels to shop during the pandemic. In the report, a few retailers have indicated ambition to rapidly accelerate transformation efforts. Inditex, for example, currently plans to increase online sales to 25% by 2022 from 14%. In addition to retailers, consumer firms also plan to improve e-commerce platforms. Non-health insurance firms have also emphasized the prior investments in digital tools and effectiveness helped them to build operational resilience.
The pandemic forcing people to sit at home, even the banking and finance industry has been looking towards increasing their digital adoption for retail and commercial clients. The report also noted that, among large banks, Goldman Sachs indicated continued investments in technology platforms to enhance user experience and straight-through processing. Morgan Stanley will invest in technology and platforms to continue as a part of modernizing the company. However other than these sectors, Kotak Securities said that comments made by players in the energy, healthcare, pharmaceuticals, and hospitality have been in favour of increasing spends on areas that will benefit the IT companies.
It would be expects outsourced IT services spending growth to increase to 6-8% range between the financial year 2021-2024. Kotak Securities said that they note that Tier-1 IT has strong capabilities in several digital competencies evidenced from rankings in the leadership quadrant in various industry analyst reports. According to analysts, IT companies will have to do more non-traditional work to capitalize on this platform effectively. TCS and Infosys will be at the front line of this transformation courtesy strong interactive practice and innovative techniques, while HCL Technologies and Wipro have strength in the digital infrastructure layer.
