India Is About To Get A Technology Moment

  • Indian-born executives are drawing rave reviews at companies like Microsoft and Google.
  • They speak English, they work smart, and now they’re getting paid.
  • Companies once derided as “outsourcers,” that can tap into this talent, may be about to take off.
India is about to get a technology moment

With investors souring on China, India technology is about to get its moment.

The stars are all aligned. Indian-born executives are now in charge at Microsoft (NASDAQ:MSFT) and Google (NASDAQ:GOOGL). Indians speak English, they work on some of the hardest software problems out there, and they are price competitive.

Before the most recent stock market downturn Cognizant (NASDAQ:CTSH) was up almost 49% for the year, and Infosy (NYSE:INFY) almost 22%. Even Wipro (NYSE:WIT) was up, this during a time when other enterprise technology companies like IBM (NYSE:IBM) and Hewlett-Packard (NYSE:HPQ) were down 20%.

CTSH stock chart

Source: Cognizant Stock Price data by amigobulls.com

Cognizant has had the nicest run, because it’s the most American of these companies. Their headquarters is in Teaneck, NJ. Their CEO is named Gordon Coburn. But the secret sauce remains the same as for the other companies derided as “outsourcers.” They have an ample supply of talent at a time when talent is in short supply.

Cognizant has also focused on controlling software rather than just odd-jobbing. The company’s purchase of Trizetto last year, for $2.7 billion, gave it a strong position in the U.S. healthcare market, which is still automating six years after the 2009 HiTech Act brought billions of dollars in stimulus cash to the sector.

While that cash is drying up, replaced with penalties for failure to automate, there are also growing business pressures on clinics, hospitals, and medical practices to deliver “meaningful use,” the ability to maintain, get value from, and communication from within Electronic Healthcare Records. Hospitals are also a key testbed for the Internet of Things, with everything from CT scanners to patient bracelets getting outfitted with chips connected to wireless networks.

For the June quarter Cognizant scored revenues of $3.08 billion, up 23% from the previous year’s $2.517, and Cognizant managed to bring $420 million of that to the net income line, 13% more than the previous year’s $372 million. This ability to maintain margins while achieving growth is going to be appreciated more in the new market, where growth for its own sake, the kind Salesforce (NYSE:CRM) and Amazon (NASDAQ:AMZN) have achieved, isn’t going to get the same premium as before.

There’s more to this story than Cognizant, Microsoft and Google, of course. Throughout the U.S. tech sector, Indian programmers and executives are getting new respect. (My wife works at a U.S. company with many such people.) If the U.S. H 1-B program, which allows skilled people entry into the country, is expanded, these folks will get more U.S. opportunities. If it’s not, these opportunities will go to Canada-based talent, and it all comes back to a growing pipeline in India that is only now getting the credit it deserves.

It’s not all beer-and-skittles. A recent TV ad campaign by PC-Matic identifies the security units of Symantec (NASDAQ:SYMC) and Intel's (NASDAQ:INTC) McAfee unit as being in India, and thus unfriendly when compared with Rob Cheng’s PC-Pitstop, which is based in Sioux City, Iowa and whose programmers live all around the U.S.

Things like this go in cycles. China has had its moment in the sun, with people like Jack Ma of Alibaba (NYSE:BABA) compared with Sam Walton of WalMart (NYSE:WMT) and Bill Gates of Microsoft. India is about to get its moment, and that moment may last for several years.

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