FTA to be a win-win for India-UK IT ties

Bhawani Shankar

A new normal defines work and business in the India-heritage IT firms today: higher salaries, high productivity, and virtual work to deliver higher growth. In some ways this is ironically similar to Boris Johnson’s articulation of a high wage, high productivity growth economy. But, riven by a looming recession, shaky party politics in Westminster and a nation struggling to find its post-Brexit feet, the UK is far from the vision. Is there an Indian IT-British win-win in the Free Trade Agreement?

While Covid-19 had a debilitating effect on millions of people across the world, it came as a boon in disguise for IT firms. Overnight, these firms and their clients worldwide rewrote business rules and mode of work in ways even the most prescient analysts could not have predicted. Far from clients buckling down, IT spending spiked through the roof in all but a couple of industries like retail, and business literally zoomed. Most importantly, work turned virtual and ‘offshore’ came to mean anywhere from beach to balcony to boardroom.

War for the best

For millions of IT professionals in India, booming business led to a literal war for the best talent leading to more than commensurate hikes of anywhere between 20 and 60 per cent in salaries. Hiring, too, spiked after a brief turn of events in 2020. A $178 billion Indian IT industry is now not only growing faster than ever, but is also more global and productive.

While the USA has long remained the default destination for Indian IT firms and still commands about 65% of exports, the UK and Europe have been growing. Exports to Britain comprise 17% of the $178 billion industry. But with markets growing in other parts of the world, such as Latin America, Japan, Africa and the Far East, Britain will need to make itself extra attractive to retain the interest of Indian IT industry.

From a demand perspective, businesses in the UK need technology as much as any of their peers across the world do. Dealing with a potential recession, low growth, higher interest rates for the foreseeable future and a quest for post-Brexit trade partners all add-up to give the need an extra edge.

The 2030 roadmap for India-UK future relations which forms the boilerplate for the FTA under discussion actually does not focus on IT or ITeS as a sector in need of urgent renewed partnerships because the UK already buys about $30 billion of services and products from Indian firms.

But almost all industry verticals today, such as health, education, cyber security, sustainability or transport need an array of modern technology including artificial intelligence (AI), data analytics, cloud native applications and, telecom and 5G. It is a singular opportunity for British businesses to shed clunky old technology and embrace the new.

The early years of India’s IT outsourcing revolution were all about cost reduction and scale. Now the challenges are to be seamless with the business clients they serve, understand the context and provide solutions that recognise the specific industry nuances – for instance, the criticality of respecting patient confidentiality and compliance in the Health sector, or taking cognizance of the UK’s stated energy transition plans when developing platforms for the transport sector. These are tasks of much higher complexity and require finer skills than had been the case in the previous decade. Conversely, it somewhat dulls the cost focus and raises the quality bar.

Partnership level

Realising these plans – of course, pending the final agreements – will also need a level of partnership that is supported by appropriate visa regimes, specific training and education. But given the ambitions of the UK government and its need, the potential to double the IT services revenue certainly exists over the next decade.

It will, however, need a level of commercial creativity too: some Indian firms have introduced so-called ‘self-funding’ of IT programmes: invest in developing a solution and share the gains at a later date. Business leaders often want to leapfrog technology but seldom have the cash to invest: for them, a cash-rich, commercially flexible Indian IT partner would be what the proverbial doctor ordered and allow them to take a longer-term view rather than resort to usual ‘band-aid’ short-lived solutions. Language, feeling at home in the UK, familiarity with Indian IT as well as the acceptance of working from virtually anywhere are all key ingredients for success. Just add political will to market readiness!