Wednesday, July 8, 2015
Inflection point for the IT sector
The IT sector is undergoing a fundamental change. Technology is not only changing fast it is changing so fast that even before a certain technology has been adopted by the market something else is already catching attention. It is becoming a big headache for IT services market to manage the change. They are not able to fast changing technology landscape. They are being torn apart between what customers are using and what creates buzz. What brings scale and money and what keeps them in the hype cycle.
IT product companies like SAP and oracle which gave partners in the IT services sector a good revenue over the years are changing their business model. SAP ECC which used to be the cash cow for the IT services organizations are finding it difficult to get new customers as the market is saturated and competitive. SAP themselves are making acquisition in areas where the IT services companies don’t have a clue on how to make money. They are not even sure if they should start investing money in those emerging areas as most of these new areas start their natural decline even before they mature.
Infosys is making a spate of investments in exciting areas and now looks more like a Venture Capital firm rather than an IT firm. Of course Infosys can afford it with its huge cash pile. Smaller companies are trying hard to be a part of the catch up game. IT services sector is in an inflection point and it needs to be seen how they play their cards with each company having its own unique limitation.