IT firms seen boosting exports to Europe

MUMBAI: Europe is expected to contribute significantly to India's

fast-growing share of the information technology market, and worries about a

slowdown on the continent are unwarranted, SG Securities said.

"We believe that concerns over the European business slowing are

misplaced, both in the Indian context and for the rest of the world," SG

Securities said in a research report.

"The Indian companies, US e-service companies and European IT majors

have shown significant strength in their European operations," said analyst

Kevin D'Silva in a November 22 report.

Europe accounts for about 24 per cent of India's IT exports, the report said.

It quoted an Indian industry association study as saying India's revenues from

Europe will grow 63 per cent to $1.4 billion in the fiscal year to March 2001.

The majority of the industry's exports are headed to the United States.

A revenue slowdown in European operations reported by a few global technology

firms has ignited fears it could hit export prospects for Indian IT companies.

But SG said this was not so.

"Companies whose European operations suffered were more hit by their own

specific set of problems, and the sector's fundamentals remain intact," SG

said.

India's IT services industry has grown at a scorching pace amid the global

boom, with companies evolving steadily since the 1980s. Firms are also moving up

the value-chain, switching from Year 2000 conversion programs to Internet and

e-commerce services.

Led by IT services, India's software services industry, which has been

growing at an annual clip of 55 to 60 per cent, is forecast to export $50

billion worth of software in 2007-08 from around $6.0 billion now.

"Most of the top Indian IT companies have reported better-than-average

revenue growth from their European operations," the SG report said.

It said Indian computer software bluechip Infosys Technologies’ European

revenues grew by 162 per cent in the July-September quarter on the year,

contributing 18 per cent of its total revenues.

Diversified firm Wipro's revenue mix from Europe rose to 27 per cent during

the quarter from 24 per cent last year while HCL Technologies' European revenues

were up 40 per cent on the quarter.

Industry experts say a combination of higher IT spending by overseas firms to

improve productivity, high repeat business and utilization of the offshore model

will help leading Indian IT firms to continue to report strong sales growth.

(C) Reuters Limited 2000.