IT Services: Go Local
June 8, 2009 – 2:19 pmPerceived till recently as low-budget and low-margin, the domestic market now means big business to Indian IT majors. Wipro, the low-profile Bangalore-based FMCG and software services company, in May bagged a Rs 2,200-crore, nine-year contract with Unitech Wireless. To begin with, it will integrate the operations of the company with the use of enterprise resource planning and host all its data centres. Subsequently, it will also operate and maintain the information technology network of the newly-formed mobile services company. There were several players in the race for the order but Wipro bid aggressively to breast the tape.
Earlier in the year, Wipro had signed a Rs 3,000-crore contract with Aircel and got a Rs 1,182-crore e-governance order from the Employees’ State Insurance Corporation. Not to be left behind, Tata Consultancy Services, the country’s largest information technology company, recently signed a Rs 1,200-crore deal with the government to migrate passport services to the electronic platform. Delhi-based HCL Infosystems has got a seven-year, Rs 400-crore system integration order from state-owned Bharat Sanchar Nigam Ltd. IBM too is learnt to have landed some large deals in 2009.
How the recession in the West has changed the priorities of IT companies! Perceived till recently as a low-budget and low-margin ‘documentary’ film, the domestic market has turned out to be the latest action-packed thriller. Orders that run into thousands of crores are being placed from companies in the telecom, finance and manufacturing sectors. Eager to revive the sagging economy, the government is ready to run huge deficits and write large orders for IT hardware and software. Naturally, every IT company now sees it as a happy hunting ground. From IBM and Hewlett-Packard (it had bought software services provider EDS recently) to homegrown majors like Wirpo, TCS, HCL Infosystems, Satyam and now Infosys also, all want a slice of the pie.
The reasons are not hard to find. The US and UK markets — which account for almost 80 per cent of the revenues of most IT companies — have slowed down considerably. Companies there have reduced IT spends and are going slow on outsourcing. Two, IT firms earn in dollars; so, a single percentage rise in the Indian rupee can erode their operating margins by 30-50 basis points. Three, on the back of Americans losing millions of jobs, the anti-outsourcing ‘protectionist’ cries of US Senators and President Obama are hurting sentiment.
Source:http://www.business-standard.com/india/news/it-services-go-local/359746/