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Indian IT is seeing green shoots amid macro storm: Nasscom Chair Rajesh Nambiar


The $245 billion Indian IT industry is seeing some green shoots even as global macroeconomic challenges continue to put pressure on technology spending, said Rajesh Nambiar, the newly-appointed chairperson of IT industry body Nasscom.

“Clearly there is a bit of a slowdown in discretionary spending from the customers of all our organisations,” Nambiar told ET in an interview.

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He said a strong deal pipeline in the fiscal first quarter and increasing investments to leverage Generative Artificial Intelligence (GenAI) are positive signs. These may, however, not offset the broader slowdown in the tech sector but it will probably take a few more quarters before the industry enters into the “renewed growth phase”, said Nambiar, also the chairman and managing director of Cognizant India.

Segments such as business process management, and engineering, research and development (ER&D) have also seen healthy growth, while the number of global capability centres (GCC) in the country has expanded.

On how India can stay ahead in the GenAI race, Nambiar said government support will be critical in the coming “GenAI revolution”. Companies wanting to leverage the technology, including India’s over 60 active GenAI startups, are faced with limited high-quality and ready-to-use training datasets, and there is a lack of high-performance compute capabilities at scale, he added.

“We are in discussions with the government to ensure that we are able to come up with a framework and policies which will actually support some of this as we move forward,” he said.

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At the same time, governance around AI must be “balanced”, he said, adding that it must address user privacy, data protection and disinformation without stifling innovation. The Digital Personal Data Protection Act was a good way to put some of these guardrails in place, but more time and understanding is needed before further AI regulation.Also, there has been a surge in large deals in the IT market in the past few weeks. “The large deals are predominantly areas where clients are looking at cost efficiency, economies of scale. That’s why suddenly growth momentum in small deals have dried down because discretionary spends have gone away. But large deals will hopefully make up for decline in small deals over a period of time but (large deals) don’t translate into quarterly revenues for many of the companies,” Nambiar said.

He also pointed out that small deals in some areas remain strong such as AI, cloud and cybersecurity. Asked about campus hiring, Nambiar said Nasscom member companies continue to invest in campuses. “But based on this broad cautionary demand environment, you will find that companies are really focusing on enhancing utilisation. There is a shift to a more just-in-time hiring model which is not a very conducive model for the campus hires,” Nambiar said.

According to the industry body, more than 332,000 tech jobs were posted in the June quarter, indicating that overall demand still exists but not necessarily at the fresher level.

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