Better opportunities for Mid-size IT firms in the upcoming times?
Third party maintenance contacts going to be a norm in the upcoming years?
These are few questions making rounds in the Indian IT-BPO circles. The buzz is: the Indian Big trio---Infosys, Wipro and TCS may face slower growth rate in the upcoming years. The slowdown of the top players will definitely affect the IT industry as a whole, but the lag of the leaders will actually be the boon for the mid sized IT firms, hold the experienced BPO analysts.
One important reason for the emerging trend, as pointed out by the industry experts, is that BPO sector has more opportunities to sweep their ways in the upcoming years, whereas the IT sector is going to experience a halt in the demands for IP services. And the net result is BPO sector will have a higher growth than its IT counterpart in the upcoming years. Nasscom data, which is regarded to be the most authentic source of information about IT and BPO sectors, also supports the view. According to Nasscom data, BPO exports of India in absolute dollar terms are to surpass that of the IT by the year 2020.
Currently the chunks of BPO
projects---over 40 percent---happen to originate in relatively lower-value customer interaction services. This is however not an area that significantly maps in the big players’ scheme of things. The major IT players would rather concentrate on the areas that combine IT-BPO services platforms, for example the end-to-end finance and accounting outsourcing solutions.
There is another factor, which is also going to support the trend and that is the growing diversification of the industry. During the last IT boom that is between 2004 and 2008, the IT companies have expanded their presence to an amazing height. The back office presence of the IT companies and other multinational companies has also increased by leaps and bounds. As a result, the Indian big trio now seems to have a different area of focus. “We see that the centre of gravity of the Indian IT industry is moving from the likes major Indian firms to the other constituents,” says a BPO analyst from the brokerage firm, Edelweiss Securities.
However, there are other players all set to lap up the opportunities that the Big Trio do not consider worth accepting. IBM, Accenture and MphasiS are the three firms eagerly waiting for the right opportunities. Currently, IBM has some 72,000 workers in India alone, while Accenture’s strength is 44,000. And MphasiS hires some 73,000 employees in India. The total number of employees of these three companies is slightly lower than the combined strength of TCS, Wipro and Infosys. But size would definitely not be a deterrent for these mid-size IT firms, when it comes to expand their volumes of exports for the coming years. IBM’s total business in India---both exports as well as business in Indian market---has been estimated at a whopping $2 billion, while Accentures’ export revenues from India could be between $1.5 billion and $2 billion in the next few years.
With big multinationals desperately trying to cut back on their product-based support costs by doling out maintenance contacts to third party providers, instead of business solutions providers like SAP and oracle, it could be a wonderful time for the Mid-size Indian tech firms for lapping up multi-million dollar maintenance contracts.