It's Indian IT cos vs tech MNCs in 2012
Indian IT services firms are gearing up for a slugfest with their global peers as large corporations in the US and Europe are set renew technology outsourcing contracts with a combined value of at least $19.5 billion this calendar.
As many as 686 outsourcing IT deals with value of at least $25 million or more are due to expire in 2012, show data from Information Service Group, a technology market research firm that owns TPI, the largest outsourcing advisory. At least 78 of these deals are worth $250 million each.
The number of deals and the combined value are “new records”, say Paul Reynolds who lead research for the ISG. Global service providers including IBM and Accenture hold 37 % – by value – of the expiring contracts. This spells good news for Indian IT firms, as over the last few years there has been an increasing trend of corporations choosing at least one India-based firm among their technology service providing vendors.
The churn
“For some peculiar reason, there is large churn now,” said, a senior executive at HCL Technologies. “Earlier, incumbent players continued because getting in a new vendor is not easy due to costs. Now every one in three deals that are up for renewal are going to new players.”
A report by Standard Chartered pegs the value of new deals coming up for renewal this year at $47 billion. According to the report, at least $6 billion opportunity will come up for large offshore Indian vendors. “If there is a 30% churn that would mean $12 billion worth of new opportunity,” the HCL Technologies executive added. Over half of the deals are expected to come from Europe, the report said. “Market share gains in the renewal deal pipeline will be a key differentiator of volume growth across players in our view.
Further deterioration in macro-economic environment remains a key risk to volume outlook,” Standard Chartered analysts Pankaj Kapoor and Apoorva Oza noted in his report.
In the past few months, HCL has announced new contracts with pharmaceutical major AstraZeneca, oil & gas major Stratoil and telecommunications biggie UPM, in most cases replacing incumbents in deals which were up for renewal.
The opportunity
Other large Indian providers like Tata Consultancy Services too have had significant success in winning contracts where they replaced an incumbent transnational IT player. The company replaced CSC as the IT services provider for Denmark’s largest telecommunications firm TDC.
Though the exact value of the deal is not known, the multi-year deal is pegged at well over $200 million, by industry insiders. “We expect renewal deal market will continue to open up for Indian vendors,” Kapoor wrote in the report. With prevailing uncertainty, the deal sizes are likely to be smaller, which could help Indian IT vendors, especially the mid sized players.
About one-third of technology services contracts expiring in 2012 have an application development and maintenance (ADM) component, an area where Indian IT services providers are known for their strong competencies. Other major services that are part of deals coming up for renewal are related to business intelligence, social media applications and enterprise mobility.
Anjan Lahiri, president and CEO of mid-sized IT firm MindTree‘s IT Services business, says that though number of contracts have gone up, total outsourcing is not going up. “This means companies are splitting up large contracts to smaller ones, which is a good thing,” Lahiri said.
Over the last few years, multi-sourcing has been gaining strength as corporations look to work with more than one technology vendor. However, having a larger services portfolio, the transnational technology firms do have an advantage over the Indian IT firms. “The bigger the deals, the less cost competitive Indian companies are against the likes of Accenture and IBM,” Lahiri said.
That a good chunk of deal renewals are happening in Europe, test the Indian IT firms’ ability to crack the continental European outsourcing market. So far, Indian IT firms have managed to gain entry into UK market but is yet to gain meaningful traction in large markets such as Germany and France.
Via: TOI
Looking for Office Space ? Connect TODAY !
Commercial Space for Hospitals on Lease/Rent Hyderabad – India
Ready to Occupy Office 86000 sft Space in CBD, Hyderabad
Prestigious & Exclusive Office Space in Hyderabad
Fully Furnished Office Space for Rent, Banjara Hills, Hyderabad
Office Space for Rent – Bangalore
Office Space for Rent, Pune
Connect With Us
Related Posts
- Real Estate Act comes into effect: 10 things you need to know about new law ( May 4, 2017 )
- Expats Living in Comfort – Hyderabad, India ( May 4, 2017 )
- MNC queue to Hyderabad grows longer; JP Morgan & IBM look for office space ( June 22, 2016 )
- An Apple in Hyderabad’s IT Garden: CEO Tim Cook’s big announcement Today ( May 19, 2016 )
- Hyderabad May get Disneyland Park ( April 22, 2016 )
- Indian Office Space Absorption Up 11% in Q4: Survey ( April 13, 2016 )
- Cognizant plans to add 8,000 people at Hyderabad facility ( March 9, 2016 )
- Ranked 139 in world, Hyderabad is Best Indian City to Live in ( February 24, 2016 )
- The Platina – Exclusive Commercial Space, Hyderabad ( February 19, 2016 )
- Apple, Inc set to open new $25 million Tech Center in Hyderabad, India by June ( February 16, 2016 )
Recent Posts
Recent Comments
Archives
- February 2018
- October 2017
- May 2017
- June 2016
- May 2016
- April 2016
- March 2016
- February 2016
- January 2016
- December 2015
- November 2015
- October 2015
- July 2015
- June 2015
- May 2015
- April 2015
- March 2015
- February 2015
- December 2014
- November 2014
- October 2014
- September 2014
- August 2014
- July 2014
- June 2014
- May 2014
- April 2014
- March 2014
- February 2014
- January 2014
- December 2013
- November 2013
- October 2013
- September 2013
- August 2013
- July 2013
- June 2013
- May 2013
- April 2013
- March 2013
- February 2013
- January 2013
- December 2012
- November 2012
- October 2012
- September 2012
- August 2012
- July 2012
- June 2012
- May 2012
- April 2012
- March 2012
- February 2012
- January 2012
- December 2011
- November 2011
- October 2011
- September 2011
- July 2011
- June 2011
- May 2011
- March 2011
- November 2010
- October 2010
- September 2010
- August 2010
- July 2010
- May 2010
- April 2010
- March 2010
- February 2010
Leave a reply