Indian IT companies look to new opportunities for growth
August 29, 2008 – 2:26 pmSlowdown in their largest market, the US, made Indian software services firms look for new services and new customers in Europe, the Asia-Pacific region, even India. Now growth is about having larger relationships, having multiple service lines, ability to integrate them and deliver value to clients. The change could well mark the beginning of the second big shift in the Indian software services business, which is expected to touch $60 billion (Rs2.6 trillion) in revenues by 2010, according to Nasscom.
Till 2001, the software companies in India earned much of their revenue by designing and maintaining applications for customers in the US. After the dot-com bust, these companies diversified into services such as consulting, back-office services and infrastructure management. These services now account for almost half of the revenue of most large companies. And through much of the past decade, firms such as Infosys, Wipro and TCS, parlayed low-cost labour, a depreciating currency and a tax holiday into a significant competitive advantage.
A significant amount of work from the USA has already been outsourced to India and in the context of a slowdown; Indian IT firms need to give customers more immediate reasons to outsource work. Nasscom projects business growth to slow by around 4 percentage points from last year to 25%.
The new services on offer include pay-as-you-use software and platform-based back-office offerings where IT companies set up a common process, say, claims processing for insurers, and offer it to several customers. Apart from these cost effective solutions, IT companies are also hoping that their alliances with firms such as Cisco and EMC will help them develop and market customized solutions.