Many many eons ago, according to Bhagavad Purana, there lived an Asura king, Hiranyakashyap. In his quest for immortality, he underwent severe penances and in the bargain attained quite a few celestial powers that almost granted him perpetual life. The list of boons Hiranyakashyap got was pretty impressive, neither man nor beast could kill him; he could not be killed by daylight or at night-time; within his home or outside it; on the ground or in the sky. Using these powers, he usurped Indras throne and went on a complete rampage. Finally, it was Vishnu who had to rid the earth of the demon king.

But what has the tale of Hiranyakashyap got to do with Indian IT? Quite much, according to Anand Mahindra, MD of Mahindra & Mahindra, who used the tale to illustrate the challenges faced by the IT industry today. Challenges like the US slowdown, adverse currency changes, rapidly escalating costs in both salaries and infrastructure, and inadequate talent pools below the tier-1 and -2 institutions. The IT industry today faces challenges every bit as complex as those Hiranyakashyap posed for Vishnu, says Mahindra.

For the Indian IT industry reeling under severe strain, the top groups are the beacon of light and hope. And the groups that succeeded in the past year are the ones that were not coping with the crisis on hand but constantly keeping their eye on the horizon, exploring newer avenues and even returning to their roots so as to say.

Made for India!
One look at the growth pattern of the different groups and it becomes obvious that the ones that managed to post robust growth were the ones that were in some way looking at the booming domestic market. For long, these top companies have adhered to the Made in India philosophy; but the need of the hour is to relook at the export-oriented mindset. Take the instance of HCL, the group clocked 32% growth over last year, the highest compared to any other group in the top five, which includes Tata, Wipro, Infosys, and HP. And the reason is fairly evidentboth its constituent companies, namely HCLT and HCLI, tapped the opportunity in India and went out for them. In fact, domestic revenues for the group stood at a healthy 42% while exports stood at 58%.

Infosys is on the other end of the spectrum. The growth for the posterboy of Indian IT dropped from 45% to 20%, the slowest among all the top groups in our list. And unlike in the case of HCL, the reason for Infosys dismal performance was a lack of India strategy. The revenues from domestic operations for Infosys remained almost flat in a year, thus the companys percentage of total group revenue declined.

Of the other groups, HP India continued to ride the Indian wave, and even Wipro managed to tap the Indian market with its domestic business providing a cushion from the rather stale export growth. Meanwhile, TCS made a grand foray into the domestic BPO industry, which contributed around Rs 500 crore to its topline.

Thus it goes without saying that the groups need to court domestic enterprises and companies with the same enthusiasm and zeal that they showered on the MNCs. Made for India is turning out to be a big story, almost as big as Made in India.

Build or Buy?
Indians (companies and even individuals) are often blamed for their lack of killer instinct. Hence most Indian enterprises seem fairly smug at a 30% y-o-y growth, preferring organic growth to an inorganic one. Indian IT companies have steered clear of large acquisitions targeted at just scaling up and continue with strategic ones to add skills and/or getting into geographies, like TCS acquisition of Comicron (Latin America) or FNS (banking). This is all good when the going is good. But, in turbulent times, there needs to be a change in the way things are done.

Looking at the various groups, it becomes obvious that they are playing it safe. There were no major acquisitions in the past year (when it would have actually been cheaper considering the strong Rupee) by any group, except for Wipro that acquired US-based Infocrossing for $600 mn, the companys biggest till date. Among the others, HCLT acquired US-based Capital Stream for $40 mn. While, there were no significant ones from Tata (IT group) or Infosys.

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