Global IT race


Global IT giants like IBM, EDS, Accenture and Oracle are gearing up to take on the challenges posed by their Indian rivals.

A number of global research firms, including Goldman Sachs, Forrester, Gartner, AMR Research and Wachovia Securities have suggested in separate research report that Indian IT majors are outpacing their rivals in the US as well as other low-cost countries like China. While US tech services firms are likely to post an average operating profit growth of 7% this year, the growth rate is pegged at 22% for their Indian counterparts, Goldman Sachs said in a report.

The trend would continue through the next year as well with operating profit growth of US companies estimated a tad better at 9% as against the continued growth of 22% in India, Goldman Sachs added.

The analysts anticipate an average revenue growth of 30% for the large-size Indian IT companies in 2006 and 2007, as against 8% for their US rivals.

The industry experts believe that the Indian IT companies, particularly those in the BPO space, have moved beyond just low-cost service providers and are focusing more on efficiency and customer satisfaction.

Dana Stiffler of US based AMR Research said in a recent report on Indian IT sector that the latest quarterly results of large India based service providers show impressive performance across industries and all horizontal practice areas.

Rafts of new clients came on board; existing client bases were very profitably mined, and thousands of new employees joined the firms. Despite being late to the party, the US IT majors are finally responding to the continuing growth trend being enjoyed by their Indian rivals, believe the analysts.

Skilled and vast workforce, low-cost operations, a booming economy, good telecom links and a fast-growing market have already led to global giants like Microsoft, IBM and Intel announcing investments to the tune of over $15 billion (nearly Rs. 70,000 crore) in India besides thousands of new jobs for their operations and joint ventures here.

Global IT companies like German application software giant SAP, IT services major IBM, world’s largest software maker Microsoft, largest computer chipmaker Intel, US based software giant AMD and leader in networking for the internet Cisco have each committed over $1 billion investment in the country over the last few months.