After 18 months, 5G will take centrestage in tech world: CP Gurnani, Tech Mahindra

There is no globalisation 4.0 unless there is a technology involved in it, CP Gurnani, CEO & MD, Tech Mahindra, said in an interview with ET Now at Davos in an exclusive interview.

Edited excerpts:

What is the trend in IT?

I do not think that there is a perfect trend anywhere. The reason I am using the word perfect trend is that a lot is dependent on how US ultimately comes out of the current crisis of government shutdown because US accounts for almost 60% of the Indian IT spend, for us it is 46-47%. I would not call it a crisis but I would definitely say it is an uncertainty and I do not think there is a very big clarity on that subject.

Similarly, the whole Brexit issue is clearly making people a little indecisive for the moment. But the good news is that is there is no globalisation 4.0 unless there is a technology involved in it. The world is connected. The solutions will be connected. Economies have to be connected. Whether we end up solving the skill problem or whether we end up solving the sustainability issues, we will have to use technology.

Are you essentially saying here that with the US going through troubles, with global trade tensions rising and Brexit in particular, Indian IT and the world at large needs to be prepared for a period of perhaps more sustained uncertainty?

I would not immediately react to this because I have seen that IT is a lag industry. It is not like change in food or oil prices changing your behaviour overnight. The impact, if any, is two to three quarters away. I would wait and watch and do my scenario modelling but many a times, it works out as an opportunity. Ultimately where is IT budget going? It is going to run the operations, to change the operations or to grow new businesses. Right now, what is happening is running the operations is getting less percentage of IT or technology spend and change and growing is getting more.

In 2018, tech stocks outpaced the indices because of a weaker rupee. What sort of margin cushions could tech companies look for now?

I do not think it was only because of this. When I said, at Tech Mahindra, 45-46% business comes from US, I had other currencies to battle. Every currency had its own equation with the US currencies.

It kind of balances out.

That is true.

What about pricing? Are we seeing more aggression there?

If it is a block chain solution, actually you get more. If you are willing to put more skin in the game, the risk reward pricing works very well. With discord computing or ARVR or data to AI kind of a solution, you are in a good position and more often than not, you are putting in the tail-end which is premium, which is not so easily available and you are also solving some of the customer challenges that the customer is willing to pay for.

As far as digital investments are concerned, will the focus continue to be on driving digital investments because digital is slowly and increasingly becoming the centre piece of the tech world? Will investments be focussed driving digital investments?

After a certain point, digital will become hygiene. But for the next 18 months. we are still talking digital and after 18 months when 5G becomes centrestage, we will talk digital plus 5G.

Talking about 5G, you are somebody who has perhaps a stronger presence there. You have always traditionally been strong in telecom. What sort of an opportunity does 5G open up for a player like you?

5G for users means more connected device, less latency and high speed availability. 5G for enterprises actually has a lot more usage. But as 5G is still being rolled out, as we go to Barcelona next month you would find 5G enterprise use cases being the centre of Mobile World Congress.