Time for Indian IT firms to leverage trillion dollar digital opportunity

Finance Ministry's interventions for streamlining the operations of Income Tax web portal is a timely move. Since its launch in June this year, the portal has been facing consistent glitches. The new web portal is aimed at making the filing process easier as the government aims to widen the tax base. However, this ambitious objective has been marred due to initial glitches.

Already, the Finance Minister had held a meeting with Infosys officials on June 22 taking suggestions from external shareholders like the representatives of Institute of Chartered Accountants of India (ICAI) to resolve the glitches.

However, persistence of problems again forced the Finance Ministry to call the CEO of Infosys on August 23. This time around, the ministry has asked the company all the issues by September 15 along with making all features functional by putting in additional resources as per the agreement.

This sorry state of affairs doesn't augur well for India as the country boasts of its prowess in software services space across the globe. The country is home to global IT services biggies which are serving enterprises across the globe for optimum efficiency. Therefore, it is expected that this technological prowess is leveraged in the nation building process. It is not that these companies are not contributing to the national coffers. Apart from big tax payers, the $150 billion worth Indian IT industry employs more than 4.5 million people. These cash rich companies are also undertaking many social activities for uplifting the standards of living of Indian society. Given such high standards of Indian IT firms, expectations are very high. So, the initial glitches seen in the new income tax portal is best avoided.

But it is pertinent to note that any new software system requires time to stabilize. This has already been seen in the GST (Goods and Services Tax) portal. Infosys has been implementing cutting-edge solutions to income tax processing for years now, which has resulted in substantial reduction in processing time and giving back claims. Apart from Infosys, Tata Consultancy Services is also doing some fine work in passport processing apart from upgrading the technology infrastructure of India Post.

As the pandemic accelerates digitalization journey of enterprises, Indian businesses are increasing their technology spend to stay ahead in the game. This will definitely push India to emerge as a key market for technology outsourcing going ahead. Currently, Indian service providers are drawing around 60 per cent revenues from the US and around 20-30 per cent from European continent. India as a geography hardly contributes more than 5 per cent for most IT firms barring a few.

This, however, is going to change in coming years. Higher spend from private organisations along with rapid digitalization of the government services will give the much-needed impetus to technology spend. Therefore, it is desirable for Indian service providers to be serious about the potential of this geography and start deploying their best teams to implement solutions. Global IT firms such as Accenture and IBM are already big players in the Indian market. It is time that domestic IT companies also play it hard on the home territory when they are actively looking at diversifying their geographical distribution.