Indian IT exports worth $44 b still untapped

BANGALORE: Business research company CRIS INFAC has announced that Indian IT service vendors are sitting on a goldmine of $44 billion in potential exports as opposed to the present $ nine billion. This will increase India's share in global IT services from the present two percent to 12 percent. According to the agency, Indian vendors can attain this figure in close to seven years if they streamline themselves and work towards increased 'virtualization'.

"Global IT spend will continue to increase at an annual rate close to five percent. This combined with the increasing outsourcing of activities offers a huge potential for growth among Indian vendors," said CRIS INFAC research head, Sachin Mathur.

According to him, in order to tap into the potential market, the industry will have to increasingly concentrate on specific verticals or service segments along with streamlining their business model.

"Indian vendors will have to look beyond financial services, telecom and manufacturing which have been the biggest contributors so far. Though these segments combined still promise 25 percent growth, other verticals like utilities, healthcare, retail, transportation and logistics offer the real potential. Indian companies have to grab a foothold here and move up," said Mathur.

He added that companies should also increasingly look at infrastructure management, which already constitutes 18 percent of global IT spend and will see a lot more of outsourcing according to him and package implementation as the focus areas among services.

"In future, it will also be necessary to differentiate yourself from the competition and that can be obtained only by changing your business model from mere service provider to solution provider. For long term competitiveness, it will be necessary to form partnerships with deep industry expertise which will ensure bigger deals as IT spend can get concentrated," said Mathur. He opined that mergers in the future would be driven more by the immediate customer base they offer rather than anything else.

According to him, operating margins of Indian vendors who do not adopt a differential business model will suffer up to 500 basis points in the next two years as opposed to 95 positive ones for those who do adopt the other model.

CRIS INFAC also informed that on an evaluation of global competitiveness done on its newly developed proprietary framework, SoftBand, Indian vendors scored high on operational excellence and financial performance while falling low on strategic choice. The reverse was true for global companies and CRIS INFAC opined that global vendors do not offer serious competition to Indian companies.

When asked about comparative figures from the McKenzie and Nasscom reports, Mathur refused to comment saying he would not like to compare the three.

(CyberMedia News Service)