Saritha Rai discusses India's investments in SMAC technologies, which experts predict will be a leading business-technology enabler of the next decade.
As a brutal 2013 drew to a close, India’s technology services industry looked towards a new avenue — customer investments around SMAC technologies — in the hope that it will open up bigger revenue opportunities and yield transformational changes for the sector in 2014.
Experts predict that the confluence of SMAC — social media, mobility, analytics, and cloud computing — will be a potent and leading business-technology enabler of the next decade. They agree that the SMAC ecosystem will have a huge rub-off on IT services.
Naveen Mishra, a research director at Gartner India, said SMAC adoption will reach mainstream status in 2014. “We believe that the disruptive technologies will start creating new IT services business models and spur spending.”
For IT providers who traditionally dealt with CIOs within client organizations, SMAC is creating opportunities to engage, influence, and sell to business users, said Salil Godika, chief strategy and marketing officer at Bangalore-based IT services firm Happiest Minds. “As industries such as retail, manufacturing, media, and entertainment work at providing a uniform experience across all communication channels, the need for SMAC technologies will only grow.”
Gartner estimates that India-centric IT services vendors will witness an 8-10% annual revenue growth from SMAC. “We see global customers willing to invest aggressively in these technologies,” Mishra said.
SMAC may provide the much-needed boost for India’s $108-billion IT sector, which has had a jagged growth in the last couple of years on account of global economic challenges, falling consumer spending, and a Eurozone crisis in their main markets. Industry body Nasscom foresees a 12-14% revenue growth in the ongoing fiscal year. The adoption of disruptive technologies could further impel client spending.
Enthused Indian IT vendors are already aggressively chasing this market opportunity. The biggest of them are driving new asset acquisitions and investments around SMAC technologies to carve out market differentiation. Many are grabbing opportunities to set up divisions or acquire niche, boutique companies in the area of big data, analytics, and social mobility that are up for sale.
India’s largest software services exporter, Mumbai-based Tata Consultancy Services, has set up a digital enterprise unit in Santa Clara, Silicon Valley, to club its SMAC technology services under a single roof. The unit, less than a year old, has a few thousand employees already. TCS has invested in a network of cloud data centers around the globe.
Another top IT services provider, Bangalore-based Wipro, has acquired two companies in the SMAC space in the past few months. In mid-2013, it spent $30 million to acquire a minority stake in New Jersey-based big data and analytics firm, Opera Solutions. Shortly after, it acquired a minority stake in cloud-based services firm, Axeda. Axeda’s core offerings include machine-to-machine solutions.
Even the smaller IT services firm, Happiest Minds, said it has dedicated centers of excellence for each of the SMAC technologies. “Happiest Minds has a laser-sharp focus on disruptive technologies,” said Godika.
As global enterprises adopt SMAC technologies to gain operational efficiency, optimize costs, better customer experience, reduce time to market, or drive efficiencies, Indian IT and BPO vendors can cross $225 billion in revenues by 2020 (from the current $108), said trade body Confederation of Indian Industry in its recent report titled “The SMAC Code – Embracing New Technologies for Future Business.”
The growth will not be without challenges, however. Mishra of Gartner said that the talent and skill base to go after the SMAC market opportunity will be a serious concern. “India has long been hailed the talent engine for the world, but from a SMAC perspective, skills could be a concern,” Mishra said.