TCS, Infy need bigger deals to make gains in Europe
Bigger contracts involve revenues from managed services and IT outsourcing, which are generally not subject to discretionary spend cuts. IT trends in 2009 I IT sector I IT service megavendors
By PP Thimmaya, ET Bureau |
BANGALORE: Top tech firms such as TCS, Infosys and Wipro will need to increase their share of long-term outsourcing contracts in order to make significant gains in the European information technology market, say experts tracking the sector.
���Indian companies are particularly vulnerable because the majority of their revenues are derived from project services,��� said, Kate Hanaghan, senior analyst, The Bathwick Group.
MNC rivals such as IBM and Accenture, along with the European-headquartered players including Capgemini, Atos Origin and Logica, derive most of their revenues from European customers as part of multi-year contracts. Large European outsourcing customers include BT, ABN Amro, AstraZeneca, Nokia, Aviva and Volvo.
���A fall in project services spend is impacting all service companies irrespective of where they are headquartered,��� she added. ���We surely need to increase the share of bigger, long-term contracts in order to gain competitive edge,��� admitted an official at a top Indian tech firm.
Bigger contracts involve revenues from managed services and IT outsourcing, which are generally not subject to discretionary spend cuts. TCS, Infosys, Wipro and HCL derive around 25% of their revenue from the European markets, with over 90% of it coming from the UK market.
���The revenue contribution from Europe is expected to remain at same level as Indian companies will be wary of making any substantial investment in the region under the current circumstances,��� said Dr Pradeep Mukherji, MD of Avasant Asia, a sourcing advisory firm. Meanwhile, Indian companies have started putting a strategy in place for gaining more long-term contracts from the European customers.
���Indian players are developing commercially prudent ���product service lines��� in areas such as remote infrastructure management and software-as-a-service which, with strong operational focus and astute marketing, will help to generate annuity-based revenues with lower reliance on wage arbitrage,��� said Ms Hanaghan.
���Indian companies are particularly vulnerable because the majority of their revenues are derived from project services,��� said, Kate Hanaghan, senior analyst, The Bathwick Group.
MNC rivals such as IBM and Accenture, along with the European-headquartered players including Capgemini, Atos Origin and Logica, derive most of their revenues from European customers as part of multi-year contracts. Large European outsourcing customers include BT, ABN Amro, AstraZeneca, Nokia, Aviva and Volvo.
���A fall in project services spend is impacting all service companies irrespective of where they are headquartered,��� she added. ���We surely need to increase the share of bigger, long-term contracts in order to gain competitive edge,��� admitted an official at a top Indian tech firm.
Bigger contracts involve revenues from managed services and IT outsourcing, which are generally not subject to discretionary spend cuts. TCS, Infosys, Wipro and HCL derive around 25% of their revenue from the European markets, with over 90% of it coming from the UK market.
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���The revenue contribution from Europe is expected to remain at same level as Indian companies will be wary of making any substantial investment in the region under the current circumstances,��� said Dr Pradeep Mukherji, MD of Avasant Asia, a sourcing advisory firm. Meanwhile, Indian companies have started putting a strategy in place for gaining more long-term contracts from the European customers.
���Indian players are developing commercially prudent ���product service lines��� in areas such as remote infrastructure management and software-as-a-service which, with strong operational focus and astute marketing, will help to generate annuity-based revenues with lower reliance on wage arbitrage,��� said Ms Hanaghan.
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