Bengaluru: Indian it firms Generated Around $ 20 Billion in Free Cash Flows Last Year, and More Than 75% was returned to shareholders. Industry Experts Believe Indian It Firms Are In For A Big Reset, Essentially with Ai Disruptting The Linear Relationship Between Revenue and Empolyment.
The Indian It Sector is Reeling Under a Single-Digit Growth Cycle. Its mainstay Financial Services Business Is Under Pressure, and Lower Discretionary Spending Provides a Limited Runway for Growth. Besides, Indian developers are bracing for challenges from AI Advancements, Particularly as Basic & Intermediate-Level Coding Tasks breameasingly automated.
The top five Indian it firms had free cash flows of Nearly $ 13 Billion in the 2023-24 Financial Year. In a recent linkedin post, ramkumar ramoorthy, who serves as a partner at catalincs, a technology growth advisory firm, raised an intriguing question: can Indian it deploy a part of its Free cash flow As “Risk Capital”? Can it Help Prevent “Techolonization”?
“A Commonly Heard Argument is that it services sector, given its asset-light model, does not require significant investment. When growth is suboptimal, the priority is often to return cash to shareholders. While this reasoning holds, the landscape is changing. With Hindreds of Billions of Dollars Locked Into Opportunities Created by Multiple Structural Shifts in Technology and Business, Isn Bollywood Moment for Companies to Capitalize On TheSee Shifts by reinvesting in the business and leaping into the future instead of playing by yesterday's rules? ” Ramamoorthy Wrote.
Cash flows in top 5 it firms
Namratha Dharshan, Chief Business Leader at isg, said the industry is at an inflection point. ” Many of the Majors recognise that the traditional business models amidst a fast-curling technology landscape will not be sufficient to address the needs that will arise in the future. It services companies must strike a delicate balance between fostering innovation and meeting sharehlder expectations for predictable returns,
Phil Ferresht, CEO of HFS Research, Said Smart Indian It Firms Must Focus more on Reinvesting Their Cash Into Broadening their Global CapabilitesEspecially consider the recent changes with the US Administration and the Current State of Global Trade and Geopolitics. “If they just focus on pleasing their sharem
Fresht said there is an increase concert from us industry leaders that all their expenses of work outside the us will come under the protlight as new tarif Programmes Get Rolded OUT. “The impact would result in big hikes in costs, which could be as high as the 25% level, considering the current tarifs that are being set. Why stop at Mexico, Canada, China, and the Eu? “
Ramamoorthy pointed out Potential Avenues to Explore Strategic Investments Leveragging Cash Flows for Growth. “There are Abundant Opportunities for the Industry and For Well-Run Companies with Predictable Cash Flows. Bold they use their substantious cash flows as “risk capital” (akin to what alibaba or tenant did) Tech, and More? Second, Block A Consortium of these Cash-Rich Companies Invest in Building India's MUCH-NEED Compute, AI, Cloud, and Cyber Infrastructure and Benefit from it Largely to the govt? “
(Tagstotranslate) Business News (T) Tuck-In Acquisitions (T) Reinvestment for Growth (T) Predictable Returns (T) Indian It Firms (T) Global Capabilites (T) Global Capabilites Business (T) Ai Disruption
Leave a Reply