While you have upgraded your worldwide IT spend guidance with respect to the forecast that you guys have, what is driving that optimism because the commentary from North America or BFSI, etc, has not really improved at least what we are hearing. What has been your key takeaway that has led you to this bullish stance?
Naveen Mishra: In our latest revision, we have revised the forecast to eight percentage growth rate for ‘24 on the back of about 4% growth from ‘23. So, yes, there is optimism and that optimism is backed on three key fundamental pillars. Number one, we expect increased spend in the IT services, especially the consulting piece and that is going to be driving the overall IT spend. Now CIOs around the world and their board members want to invest into some of the emerging technologies such as analytics, generative AI and that is actually fuelling the optimism and the spend for 24 from an overall IT services perspective, so that is one.
Second, we also expect to spend into the data centre systems and that data centre system spend which was actually in 4% in ‘23 is expected to go to 10%. Now, again, Gen AI, the buzzword that all of us have been hearing about, in the last six plus months is having a concrete impact on data centre providers and especially the hyperscalers, the cloud providers who want to be ahead of the curve.
So, let us step back a bit here. In ‘23, CIOs started talking about Generative AI. In ‘24, they are working on creating a plan which lets us identify the initial use cases, let us think of the basics in place and then in ‘25 they will be spending money and will be executing on it.
As an outcome of this, data centre companies, hyperscalers, cloud providers, want to be ahead of the curve and hence they are spending systems especially the semiconductors, the servers, network as well what we are calling as AI network fabric, so there is a significant shift in the colour of the story this time where often we will only talk about services, but this time it is also the systems piece because in ‘25 we anticipate CIOs would execute their Gen AI strategy and as a part of it, every service provider especially the large data centre companies are spending into servers, network, all of that.
In ‘24, 60% of the server spend will be on AI servers and that creates some massive growth to support the gen AI. So, those are the two big pillars of the story that we anticipate to play out.I want to talk a bit more in terms of a couple of points that you made. One was in terms of the services, that is where you are expecting growth as well as gen AI, that is where you expect the spending to increase from the companies. Do you think that in the benefit side we will start seeing coming in for these Indian companies here?
Naveen Mishra: Benefits, absolutely. Two-three things I expect to happen from the India headquarter companies, if that is the direction you want to go. India headquartered services companies are going to have to respond to the huge focus on talent. Enterprises, CIOs and their boards are struggling with talent to respond to Gen AI and a lot of the other emerging technologies. In order to respond to that, this is a great time for India headquartered IT services companies who can prepare their talent strategy around it, number one.
Number two, they can even use Gen AI to optimise their delivery models to deliver better automation and experience to enterprises around the world. So, it is a combination of using gen AI internally for being more efficient at the same time responding to the talent crunch which is going to further accelerate and that is a great bright spot for India-based IT services companies.
Then, the second bit on the semiconductors and the servers. Yes, India has a huge universe of data centre companies and they are going to be well positioned as they invest into building their GPUs, their infrastructure to respond to the India demand as well as the global demand which is going to be coming to India because of the cost advantage and few other benefits as well. So, it is a combination of these two.
