BANGALORE: While the UK market has been more welcoming to offshoring compared to the US, Indian companies have a long way to go in terms of capturing large opportunities, according to UK-based firm Ovum Consulting.

Speaking at a session organized by Nasscom on the UK IT outsourcing market Ovum Consulting analyst Samad Masood said, "Only in 2004, did an Indian company-TCS manage to break into the list of top 40 companies involved in software and IT services projects in the UK".

The UK IT market saw some resurgence after being in the throes of a downturn in 2002 and 2003. The total size of the software and IT services market last year was £26.5 billion. According to Masood, despite the strong opportunity, Indian companies remain small players with the value of deals still in the paltry £100 million - £ 150 million pounds range. "This can be compared to the likes of top tier players like IBM and EDS which still continue to get projects in the range of over £2.5 billion pounds," he added. Pointing out that local and European companies like Capita, Capgemini, Atos Origin and British Telecom dominate the mid-tier, he said that however, the bright spot in this scenario is that in terms of growth, Indian companies top at a steady 30 percent rate.

Masood urged Indian companies to explore opportunities in areas like the government sector and applications development. "With the offshore model getting past the hype and entering the mainstream, it is no longer the differentiator. To succeed, companies should focus on key areas and also look for partnerships and M&A opportunities," he added.

Speaking about the opportunities in the telecom arena, principal analyst at Ovum Consulting Eirwen Nichols suggested that to increase revenues, Indian companies could focus on tier 2 telcos, reduce costs through repeatable solutions and broaden the scope of offering.