As clients transition to work from home (WFH), the demand for cloud, collaboration, and cybersecurity-related technologies continue to rise. Despite the global challenges due to Covid-19, companies are confident about focusing on making digital as the mainstream revenue generator.
Digital transformation services typically cover emerging technologies such as cloud, mobility, analytics, internet of things (IoT), and cybersecurity. For the last few quarters, IT service firms have separately reported their digital revenues for this quarter. But this trend is changing as digital is becoming part of mainstream offerings.
Dean Blackmore, Senior Director Analyst at Gartner said, “Digital is definitely mainstream for IT service providers. Comparing digital revenues across providers can be difficult because different providers use different definitions for digital revenue. We estimate that in 2019, non-digital IT services revenue was still around 52% of total IT spending. However, by 2023 that will drop to around 31%.”
Wipro has adopted digital as the mainstream revenue channel. The company has done away with a separate classification for their digital business from June quarter. According to Bhanumurthy B.M., chief operating officer at Wipro, digital has reached a scale that you don’t need to call it separately. It has become mainstream capability at Wipro.
As the CIOs focus on cost optimisation and accelerated adoption of cloud models, there will be an increase in demand for digital transformation. India’s largest IT services exporter, Tata Consultancy Services (TCS) has already stopped reporting digital revenues separately.
With the difference between digital and core offerings getting blurred, companies see no reason why they should report digital revenues separately. Infosys reported a 25.5% growth in Year-on-Year (YoY) basis for digital revenues. Infosys has signed a large deal with US investment management firm Vanguard to drive digital transformation. HCL Technologies is also helping its customers embrace digital transformation to emerge as a stronger player in the post-COVID world.