IT cos betting big on consultancy services

MUMBAI: Though the global financial crisis is likely to impact IT budgets adversely in 2009, the consolidation in the financial market is expected to bring some hope for the consultancy operations of top Indian IT companies.

The drive to either merge or acquire beleaguered financial companies is likely to create opportunities for services that facilitate business integration and efficient utilisation of resources.

���IT budgets may remain flat next year but clients are being prudent. They want to know how they can do more with less. For the same funds available, they are asking for more,��� says Cognizant MD and president R Chandrasekaran.

He feels that the current spate of business consolidation would lead to consulting opportunities for integration and offshoring. ���Consolidation, integration and regulation are the three key areas that throw up opportunities for the consulting business,��� he said.

With the entry of global IT companies in the outsourcing space, Indian IT companies have been looking at the consultancy space as the next catalyst of growth. These companies are trying for an amalgamation of IT consultancy practice with outsourcing capabilities.

As of now, IT biggies generate very little revenue from consultancy practice. For instance, top IT exporter TCS garners 3-4% revenue from global consultancy. Infosys, the second biggest IT player, clubs consultancy revenue with that from package implementation.

In September 2008 quarter, over 25% of revenue came from these two segments. It had reported 5% share of standalone consultancy segment in total revenue for the September 2007 quarter. Infosys is cautious about the future course of its consultancy division, but feels that M&A activities can aide growth.

���We believe our consulting unit will take market share during the downturn as clients demand more business value for each consulting dollar,��� said Infosys Consulting CEO & MD Stephen Pratt.