Thursday, August 9, 2012

THE PHOENIX PERFORMERS

A generous dose of aggression, mixed with a reasonable amount of caution; would hold Indian IT firms in good stead over the next few years, says Virat Bahri of B&E

Furthermore, he adds that technologies are transitioning from “heavy” owner-operated solutions to “lighter-weight” services (with service models like virtualization, cloud computing and Web 2.0 social computing getting more popular). Gartner is quite bullish on Indian IT companies gaining ground in this new environment, as it predicts, “By 2012, India-centric IT services companies will represent 20 percent of the leading cloud aggregators in the market (through cloud service offerings).” The research firm sees India-centric IT companies leveraging its long standing credibility and years in business to explore non-linear revenue growth models (not directly correlated to labor-based growth) and working on interesting R&D efforts, especially in the area of cloud computing. It is also expected that Asia Pacific will grow faster as a market for offshoring and even perhaps overtake Europe in another few years. That would be a major positive for Indian firms, mainly as their home market picks up.

This does not mean Indian firms should get over exuberant. As the focus shifts to light deals, there is going to be much more competition’ and countries like Vietnam and Phillipines are going to gain more ground with respect to Indian firms. Avinash feels that the competition is going to grow to a level where current vendors of a client have to compete for ongoing work for factors such as how much productivity improvement they can offer. Also, Indian IT majors have to aggressively explore new sectors as well as existing sectors that have been battered by the recession like BFSI, retail and manufacturing. Smaller firms have to aggressively look for niche opportunities in these large sectors. Such diversification of product portfolios, markets and verticals will get more critical as time progresses.



LIGHTENING THEIR BAGGAGE

The key shift that will affect both Indian and global companies is that clients are going to be looking for less and less block deals, even as they start letting loose their purse strings. Initially, clients are going to be finicky about pricing, but the scenario may improve slightly as the year progresses. As Tholons inicates, Indian IT firms will attempt to tap South American and East European locations as well, as client-market nations further look to cut costs. Furthermore there could be an increased focus on M&As in order to improve volume as the pricing environment continues to be tough.


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