The Indian IT industry is in a gold rush, albeit a “virtual” one. That gold is what players call “digital revenue”. It’s virtual because no two players really agree on what constitutes it.
TCS, India’s largest IT services company, recently announced that its digital revenues for the third quarter were 22.1% of total revenue, and had grown nearly 40% over the year before. It expects its digital revenue to touch $4 billion by the end of the year.
Wipro said it had $505 million in digital revenue for its third quarter, up 46.1% over a year.
Infosys stopped short of specifically calling it out as a line item revenue but called out ‘adoption of digital offerings’ as an important highlight. IBM too hasn’t called out digital revenue, per se, but continues to refer to cloud and digital services in the same breath.
The competitor everyone must be watching is Accenture, which said recently that digital accounted for a whopping 52% of its revenues for the June-August 2017 quarter.
What’s remarkable is how “digital” has been called out as a line item by many of these IT services giants, implying organisational priority over other performance parameters such as distribution across geographies, or verticals, or deal sizes.
But here’s the thing – while it may be hard to tell how much of this revenue touted as being accrued from digital is truly coming from “digital transformation” projects, there is sufficient evidence to believe a chunk of it is no more than a smart financial realignment of existing revenue. In other words, this is no more than old wine being served in a new bottle.
Magic Digital Wash
Amidst all the numbers thrown in the digital rush, the definition of what comprises digital remains fuzzy and gets fuzzier by the day. In my ongoing conversations with technology leaders on both sides—enterprises and vendors—I often ask what do they really mean by digital transformation or digital services. The responses may vary in a literal sense; however, broadly they remain similar and fuzzy. Digital is at best a trend, perhaps even a megatrend.
This trend is partly driven by how much everyone wants to talk and hear about digital, be it analysts, or enterprise leadership, or vendors. Street analysts expect enterprises and vendors to report on digital. This partly explains why vendors are, almost in a pattern, lining up to report on digital, without specifically defining what it does or doesn’t comprise. A majority of this digital transformation wave is also driven by how vendors market their offerings. It’s almost a requirement for them to phrase-wash their offerings depending on what’s hot.
Depending on the vendor, any or all of the following could be classified as “digital”—Cloud, Social, Mobile, Analytics, IoT, CRM, Supply Chain. Even traditional servers and workstations have not been left alone. As part of a digital transformation deal, a major chunk of the budget is still same old hardware.