Despite the fact that, (as discussed before in this blog, and in the NASSCOM blog), Indian wage inflation continues to rise and competitive pressures from other global locations continue to rise, India is still The Place for outsourcing.
By 2010, India will be earning some $60bn from IT exports - a staggering number. The interesting shift in the market dynamics is that now the growth is predicted to be even greater as a result of the "unbundling" of large IT outsourcing deals. In other words the letting of streams of activity such as applications development, separate to infrastructure, desktops and so on.
As Kiran Karnik, President of NASSCOM says: "Factors like evolution of the global delivery model, unbundling of large IT outsourcing deals [resulting in a larger share for India], and the large contract values due for renewal over the next two years are some of the positive indicators for the sector."
The interest in India that our clients show is clear testimony to this - whilst they might look into other locations, both near shore (eg Europe) and far shore (eg Far East), India remains the best option for most of them.
We continue to be reminded of the size, growth and ambition of the leading Indian IT companies. We learned recently that Wipro have bought the Retek specialist Enabler for 41m euros. We work alongside Enabler at Tesco and in some ways the deal is unremarkable - they're relatively small (30m euros turnover) and had been courting possible buyers. However, other factors are worth further consideration. 1. they are a niche company - specialist skills in the retail sector, which indicates that Wipro have detailed sector-level strategies, including acquisitions. 2. it is Wipro's 5th purchase this year. Given the hit rate and long lead time in such deals, this indicates heavy levels of internal investment. 3. they've still got $1bn cash on the balance sheet ! So, I think the message is........expect more of the same !
Posted by: Richard Newsome | June 21, 2006 at 02:02 PM