Even though most Indian information technology companies have been talking of increasing their share of the digital pie for at least the past two years, but even until now, there is no consensus on what constitutes digital business.
According to a report in Mint, India’s information technology industry body has said it will not come out with a broader definition for “digital”.
Most IT companies are using digital as an umbrella term for revenue generation from “areas generally classified as social, mobile, analytics, cloud computing and Internet of Things,” but the National Association of Software and Services Companies (NASSCOM) believes it is not practical to have a standard definition.
Rishad Premji, vice-chairman, Nasscom, ws quoted as saying that instead of a standard definition, “one should ask each of the companies to define digital and see how it is progressing over years”, and that as long as there was “an apple-to-apple comparison” within the companies, it should be okay.
Most IT companies - from large to mid caps have been touting digital as the buzzword for several quarters now. While it accounts for close to a quarter of the business for large firms such as Tata Consultancy Services, Wipro and Infosys, the mid-tier firms such as Mindtree and Zensar have said digital business accounts for 40 percent and 35 percent, respectively, of their overall revenues, the report said.
Nasscom president R Chandrashekhar was quoted as saying that the industry body does not want a “rigid and rigorous” definition of digital business.
NASSCOM’s position is significant because until now most equity and industry analysts and executives at IT firms have expressed hopes for a standard definition, the report noted.
As growth slows for the Indian IT industry with rising automation and global uncertainties, most of their clients are cutting costs on the legacy technology and software and bring in projects in newer areas such as data analytics, cybersecurity and so on, all of which get classified as digital.
In fact, even the top four Indian IT servies companies- TCS, Infosys, Wipro and HCL Technologies, define digital differently.
Analysts believe some companies are merely rebadging or reclassifying existing work as digital business, as despite claims of increase in profitability, most companies have seen a decline in revenue per employee over the last three years.
Since each company defines “digital” differently, most analysts are in a quandary when they try to draw comparisons between firms.
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