By Vipin Agnihotri
Tata Consultancy Services (TCS), India’s biggest IT services company third quarterly results in mid-January clearly show that North America still accounts for the bulk of TCS’s revenues at 49.5 per cent. On the other hand, Europe’s contribution to the company’s revenues has jumped to 28.5 per cent for 2007-08 from 23.1 per cent in 2004-05.
For TCS, North America grew at 2.2 per cent, UK at 4.9 per cent and Europe at 24.2 per cent. Similar is the case with other IT companies like Infosys, Wipro, Satyam and HCL Technologies. In my opinion, the push for growth in geographies other than the US is gathering steam. Most of the experts feel that Indian IT industry has been minimizing its dependence on the US.
According to sources, Satyam and Wipro is eyeing growth in markets like Japan, South Africa, India and China. The main reason behind all this is that the appreciating rupee against the dollar has made selling in the US less attractive. Furthermore, the majority of the contracts in the US market are second or third generation outsourcing contracts. Europe, on the other hand, is still relatively new to outsourcing.
In my opinion, Western Europe has been the fastest growing market for offshore for the last two years and is likely to continue to remain so for the next few years. Infosys like to see the US contributing half of the company’s revenues, Europe at 30 per cent and Asia-Pac (including Japan) at 20 per cent. Indian IT companies need to look at each market as a fresh market and create a customized model for that market.
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