GLOBAL AND ECONOMIC OVERVIEW
The outlook for 2023 is largely predictable due to the turbulent. Environment and
macro-economic challenges, which includes:
•Slowdown and tightening of economic activities are likely to continue during
2023.
•Reversionary uncertainty and fear that will continue till 2023.
• Inflation is running at peak and unlikely to settle in next 12-18 months.
• The global supply chain will remain disrupted amid uncertainty around ongoing
Ukraine and Russia war.
•Fragmentation of world economy.
As per IMF, Global growth forecast to slow from 6.0 percent in 2021 to 3.2 percent in
2022 and 2.7 percent in 2023.
The contraction of global economy has already stated. The next logical step for any
government is to fix its economy first. The year 2023 will be year of repair and
restore. The monetary policy changes and interest rate adjustments measures of
government might marginally tame the inflation in mid-term but it is unlikely to bring
acceleration in economy. Majority of businesses and industries are likely to go
conservative when it comes to spend, risk management and profitability management.The
Russia-Ukraine war has disrupted growth in short teRm.
The IT Industry to Grow Further During 2023
Worldwide IT spending is projected to be $ 4.6 trillion in 2023, an increase of 5.1
percent from 2022, according to the latest forecast by Gartner. The demand for IT in 2023
is expected to be very strong as enterprises push forward with digital business
initiatives in response to economic turmoil.
One must be wondering if the major industry outputs are expected to shrink by average
15-20 percent in year 2023, how come the global IT industry spend can grow at 5.1 percent?
Well, the simple reason is in last two years post COVID every company and industry have
already realized the value of digital and there are no doubts of not funding it or
ignoring it. The question is not about not doing digital rather how to fund the digital
projects. Most of the digital projects are likely to get funded through the freezing of
investment on non-strategic projects and closure of the non-strategic initiatives during
2023.
Key Priorities for IT Industry Players During 2023
1. Cloud Initiatives will get further momentum during 2023. It will serve
dual purpose of business agility and cost rationalization for organizations. The
discretionary spend will either vanish or will string to skeleton mode during first half
of 2023.
2. Artificial Intelligence (AI) Initiatives are likely to grow during 2023 to
target new products, pricing optimization, channel efficiency, promotional effectiveness
and new customer targeting in the recessionary environment. Most of AI projects will be
centered around monetization of data themes. However, the ticket or deal size of AI
initiatives is expected to be small to moderate in size.
3. Automation Theme will pick up the steam once gain during 2023 which is good news
for the vendors operating in this space. The RPA or Hyperautomation projects will get
further ammunition during 2023
4. Customer Engagement and Servicing driven initiatives using platform
re/engineering and modern architecture or architecture are likely be the only exception
that will get fresh funding amid the uncertain environment.
5. Cyber security will automatically get attention due to higher Cloud adoption.
Cloud, Artificial intelligence, Platform Engineering, Automation, and Cyber security
are going be the five technology focus pillars for majority of the companies during 2023.
Attritions, Higher Wages and Skill Shortage Trends Likely to Remain Same
The cost optimization will give further push to outsourcing during 2023 due to cost
pressure which is good news for IT vendors. The Europe will be impacted the most due to
economic volatility and geo- political conditions, is likely to explore outsourcing routes
most than other economies.
The cost of growing labor will continue to daunt the IT players during 2023 as well,
the higher attrition trends will more or less remain the same. The shortage of in-demand
skills across the IT industry will remain a challenge during 2023.
For IT industry players, the technology themes focus areas and challenges for 2023 are
not very different from this year. In a way, it is the good news as IT companies need not
change their course and strategy dramatically even during the turmoil conditions.
Strategic execution is going to be the differentiator as well as a competitive advantage
for majority of IT companies during 2023.
Conclusion
Digital will continue to drive the IT industry agenda for year 2023. Companies must
holistically assess their weakness and strengthen their digital and governance
capabilities. Cloud, Artificial intelligence, Platform Engineering, Automation, and
Cybersecurity will drive the agenda for many CXOs globally. Strategic execution becomes
very critical in an uncertain environment where the attrition, inflation, skill shortage,
higher wages and shrinking demand are inevitable.
While digital cannot address or reverse the macro-economic challenges, it can
definitely bring agility, momentum and push the growth agenda for every business in every
industry. It is perfect time for companies to go digital with all its muscles and
energies. Long live Digital!
The information technology (IT) market consists of sales of information technology (IT)
services and related goods by entities (organizations, sole traders and partnerships) that
apply computers, computer peripherals and telecommunications equipment to store, retrieve,
transmit and maneuver data. The IT market involves services such as computer networking,
broadcasting, systems design services and information distribution technologies like
television and telephones and other equipment used during the process.
The IT market also includes sales of goods such as computers, computer peripherals and
telecommunications equipment which are used in providing IT services.
The main type of information technology (IT) are IT services, computer hardware,
telecom, and software products. Computer hardware is the physical components that a
computer system requires to function and encompasses everything within a PC or laptop.
The services are used by large, small and medium enterprises of financial services,
retail and wholesale, manufacturing, healthcare and others.
The regions covered in the information technology market are Asia-Pacific, Western
Europe, Eastern Europe, North America, South America, Middle East and Africa.
The demand for cloud computing services is expected to drive the demand for IT services
during the forecast period. In cloud computing model data is stored on the internet by a
cloud computing provider, who manages and operates data storage as a service.
While these developments present strong market opportunities for the IT industry, there
is also an imperative need for IT services and solutions companies to transition from
fast-commoditizing traditional service offerings, to attract and retain quality talent
globally, to reimagine cost structures and leverage automation for increased productivity.
INDUSTRY OVERVIEW:
Web Element Solutions Ltd. is an emerging leader in providing end to end web solutions
and custom software development and is based out of Mumbai also. Our range of servicing
capabilities is wide spread and includes Business process enhancement services to augment
existing business processes effectively, Customize web application services to drive
customer centric solutions, App development to deliver efficient app solutions, Enterprise
mail hosting services for enabling targeted messages for the customers.
Web Element believes in adapting fast to the ever changing technological landscape to
continue delighting customers with solutions backed by the latest tools and technologies.
We strive to keep our development team experienced on the most relevant technology so that
our solutions are future-ready.
We continue to see the trend of global businesses turning to offshore technology
service providers to meet their needs and to increase their efficiency through
differentiated solutions. Over the past two decades, India has risen to become leading
destination for global sourcing of IT, ITes, and research and development activities.
The digital ecosystem comprises the entire technology spectrum in digital
transformation. This includes independent software vendors, system integrators, IT
consultants, product Original Equipment Manufacturers (OEMs), value-added-resellers,
cloud service providers, Software-as-a-Service (SaaS) companies, right through to
telecom providers. Technology has been central to the way people, companies and
governments have managed the Covid-19 crisis
Indias IT exports are expected to grow faster than the Indian economy in the 2022-23
financial year, despite subdued sentiment and longer decision-making cycles leading to
pronounced cost-optimisation measures. Indias GDP is estimated to grow at 7% during this
year.
Information Technology industry body Nasscom said on Wednesday that Indias export
revenue in the sector is expected to rise by 11.4% in constant currency terms to $194
billion. In reported terms, it grew 9.4% with a cross-currency impact of 2%. Overall,
Indias tech industry is estimated to touch $245 billion in the 2022-23 financial year,
with an incremental revenue addition of $19 billion during the same period.
Outlook for the Indian information technology (IT) sector
While FY 2022 was a year of milestones and resurgence-an outlier for the Indian
technology industry, FY 2023 has been the year of continued revenue growth with a focus on
strengthening industry fundamentals and building on trust and competencies. The volatile
global economic scenario and impending recession continues to support the demand for
technology adoption and digital acceleration. Consequently, technology continues to be a
strategic imperative that is a critical component of business innovation and
transformation, as well as a source of improving operational and cost efficiencies.
In FY 2023, Indias technology industry revenue including hardware is estimated to
cross $245 Bn (8.4% y- o-y growth), an addition of $19 Bn over last year. Exports, at $194
Bn, are expected to grow at 9.4% in reported currency terms, and 11.4% in constant
currency terms. Domestic technology sector is expected to reach $51 Bn, growing at 4.9%
y-o-y. In rupee terms, domestic tech revenues is expecting a 13% y-o-y growth on the back
of continued investments by enterprise and the government.
The industry continues to be a net hirer, adding nearly 3 lakh employees, taking the
total employee base to ~5.4 Mn (5.7% y-o-y growth), strengthening its position as the
Digital Talent Nation for the world.
BUSINESS OUTLOOK
Historically, IT services have followed up and correlated with GDP. However, weve seen
a disconnect recently. Despite declining GDP, IT spending remains resilient, like what was
observed during the pandemic. In fact, organizations that doubled down on technology
investments during COVID-19 are now growing five times more than the ones that didnt. The
Everest Group, which carried out a detailed study on the correlation between technology
and GDP, concluded that meaningful investments in cloud advancement, data analytics,
customer experience, and cybersecurity come into play today to ensure a companys
sustained growth.
India is identified by the world as good place for commencing the new business
considering availability of manpower at low cost and other available resources in India.
Further, Indian Government opens the market for FDI and FII for developing the
infrastructures facilities in India. The future of the Indian Software Industry looks very
positive and we expect excellent opportunities in this field.
Our Company has, in the past, majorly catered to the organizations in the Manufacturing
and Trading in SME sector. The development services provided to these companies were web /
cloud based office automation systems, inventory systems, CRM, Order processing systems,
payroll management systems, export documentation management, billing & accounting
modules etc. We have provided cloud computing and enterprise email services.
RISKS, CONCERNS & OPPORTUNITIES
Challenges
The biggest issues IT industry faces today
1. Ever increasing demands for transformation.
2. Customer experience. ...
3. Talent Recruitment and Retention
4. Skill Gaps
5. Growing cyber security, data privacy threats.
6. Advancing data opportunities. ...
7. Maturing the enterprise cloud strategy.
8. Geopolitical impacts on the tech stack.
9. Supply chain disruptions.
10. Cost containment.
11. Fierce competition for talent
12. Powering through turbulence
13. Coping with economic pressures, uncertainty
14. Transforming to meet regulatory requirements
15. Operationalizing artificial intelligence
16. Creating a hybrid work environment that works for everyone
17. Innovating meaningfully
The economic slowdown caused by COVID-19 is expected to delay planned initiatives which
will adversely impact our business. While businesses continue to explore alternate methods
of functioning, the key will be to adapt and rethink quickly. While a few sectors like
Travel & Hospitality have shown sluggish growth, the overall economic activity has
dropped in many markets. However, forward looking businesses are seizing this opportunity
to affect the change that they have been contemplating. We are helping such organisations
in their Digital Transformation journey, thus enabling a new line of business opportunity.
Business disruption, whether caused by the COVID-19 pandemic or more general societal,
economic, political and environmental pressures, often determines the need to adjust
course. Digital Transformation introduces a continuous cycle of change that affects
organisations, processes, people and culture. Many leaders today, realise that digital
transformation requires a more fundamental transformation, with the whole organisation
participating. Digital business is introducing continuous and disruptive changes that go
beyond project implementations.
Market Size/Opportunity
International Data Corporation (IDC) predicts that by 2024, enterprises in India will
shift 50% of all tech and services spending to as-a-service and outcomes-centric models.
This is among the top 10 predictions for the India IT market unveiled in the latest report
Organizations are continuing to navigate the disruptions, accelerations, and cross
currents spurred by the COVID-19 pandemic and the changing economic conditions. By 2022,
more than half the global economy is based on or influenced by digital. IDCs Future
Enterprise Resiliency and Spending (FERS) survey, wave 7* revealed that the pandemic
resulted in 60% of organizations in India have accelerated their DX investments.
The IT and communications industries will be among the most transformed as they adopt
as-a-service delivery and operating models, deal with radical alterations in
ecosystems/value chains, and recognize that their primary tasks are to help CIOs and their
enterprises share, use, govern, and increase the value of data.
India is the topmost offshoring destination for IT companies across the world. Having
proven its capabilities in delivering both on-shore and off-shore services to global
clients, emerging technologies now offer an entire new gamut of opportunities for top IT
firms in India. The industry is expected to grow to US$ 350 billion by 2025 and BPM is
expected to account for US$ 50 55 billion of the total revenue.
Impact of COVID-19 on projects - Some projects may become significantly more urgent,
with more critical business needs requiring faster delivery-or they may become less
important to the business and therefore potentially abandoned. Given that remote working
will become the norm, focus is on adapting an agile implementation methodology to ensure
quicker project go-lives.
As economic recovery progresses, enterprises operating with pared down workforces are
likely to increase outsourcing to build scale in operations to meet rising demand.
Spending on growth and transformation initiatives is also expected to start picking up
from that point on. The year 2023 will be year of repair,restore and resurgence.
Key Financial Ratios:
The key financial ratios for Financials are as per the below table and also forms part
of the Financial Statement :
| Particulars |
2022-23 |
2021-22 |
| Interest Coverage Ratio |
0.00 |
0.00 |
| Debt Equity Ratio (%) |
0.45 |
0.45 |
| Operation Profit Margin Ratio (%) |
20.59 |
18.75 |
| Net Profit Margin ratio(%) |
5.45 |
14.38 |
Formulae used for computation of key financial ratios:
| Particulars |
Formulae |
| Interest Coverage Ratio |
PBT /Finance Cost |
| Debt Equity Ratio (%) |
Debt/Equity |
| Operation Profit Margin Ratio (%) |
PBIT/ Net Sales |
| Net Profit Margin ratio(%) |
PAT / Net Sales |
SCARCITY OF HUMAN CAPITAL
This is an inherent problem with this industry. The skill required here has to be
combination of creativity and synergizing of technology to bring the best results. There
are very few training centers providing training which cater to the needs of the Industry.
Also, there is a lack of any organized channel of education and awareness as relating to
the potential of this industry.
TECHNOLOGY OBSOLESCE
The methods and software used in this field are dynamically changing and the advent of
new technology, techniques and upgrades seem to be very fast. It poses a continuing
challenge to the players in this Industry to adapt to newer technologies and also for the
personnel to get trained and use these effectively.
HUMAN RESOURCES AND RELATIONS
The Company makes efforts to ensure that employees are provided with a congenial work
atmosphere. Facilities are equipped with state-of-the-art hardware, software and
communication equipment apart from periodic recreational facilities to motivate the team.
Continuously improving the quality of people through training in skill development as well
as personality development. Management places great emphasis on continuously improving the
work environment and ambience to nurture innovation and creativity.
|
By Order of the Board of Directors WEB ELEMENT SOLUTIONS
LIMITED |
| Date: 5th September, 2023 |
Sd/- |
Sd/- |
| Place: Mumbai |
Shailesh B. Patel |
Y.S Kanwar |
|
(Director) |
(Wholetime Director) |
|
DIN: 02150718 |
DIN:02150704 |
+91-9892691696
