Indian IT to face near-term disruption, but will revive soon: Pravin Rao, Naccsom Chairman

Infosys’ chief operating officer Pravin Rao has taken over as chairman of the National Association of Software and Services Companies (Nasscom), the IT industry lobby group, at a time when the Covid-19 pandemic has disrupted the global economy.

Rao, the second leader from Infosys to head the grouping after founder N R Narayana Murthy, says the $191 billion Indian IT industry will face near-term disruption, but its fortunes will revive soon after the outbreak is contained.

While large companies will weather the impact, it will be challenging for small companies, Rao told ET’s
Megha Mandavia and
Raghu Krishnan in an interview.

Edited excerpts:

You have taken over at a time when the world has changed…

These are challenging times for the Indian IT industry. We are dealing with this unprecedented situation. However, the industry has time and again proven its resilience and it will emerge stronger. Our immediate priority is to navigate the current situation and ensure minimum impact on business and employees.

Globally, the tourism and hospitality sectors have been hit hard. Has it had a fallout on the technology services industry in India?

Every industry is trying to come to grips with what’s happening… depending on how long this will last and the corresponding recession that could happen. Most companies are trying to figure out how to be resilient… there is definitely an opportunity for the industry …and we believe that this is a tipping point for the digital transformation of the workplace. Remote digital work will accelerate. Notwithstanding the impact in the short term, in the long run technology providers will be more relevant than ever.

What are you hearing from clients?

Business and clients have accepted that this is the new normal. Some parts of the business model have changed forever. They want to get resilient and adapt to remote working. In most cases, supply chains are dramatically impacted. There is a lot of focus on workforce transformation, migrating to the Cloud. They want to take the cost out, see how to make the costs variable.

One of the biggest concerns is job losses. Should employees be worried?

We are a very diverse industry… about 80% of Nasscom membership is SMEs, mid-tier Business Process Management companies, startups. Large companies that have good balance sheets will be able to withstand this for a long time…and they will not get into retrenchment. The real challenge is in small companies. They are struggling with cash flow issues and 30% of the workforce is just sitting without any work. Nasscom is requesting the government to provide some relief to small companies so they don’t have to let go of workers.

Bankruptcy filings may increase in the United States. How does that impact Indian IT?

In the short term, there will definitely be an impact. Companies in travel, hospitality, retail are particularly struggling. There are cash flow issues, so we expect to see some demand for delayed payments etc. Even these industries have to bounce back and technology will play a key role there…in the medium to long term they will have to invest in technology for their own survival.

Do you think Indian IT will adapt to remote working? What will the workforce of the future look like?

It’s a good question. One thing’s for sure, the remote way of working will become much more acceptable. There will be some part of the business where clients would want you to work from offices. Otherwise, a big part of what we do can be done from home…there will be a mix of onshore and offshore…the entire thinking will change and this will accelerate workforce transformation.