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Rediff.com  » Business » Indian IT biggies losing out to MNCs

Indian IT biggies losing out to MNCs

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March 22, 2007 03:24 IST

Indian IT majors are lagging behind their multinational counterparts when it comes to striking big deals in the domestic arena.

This is primarily because they do not offer a suite of services (storage, database, servers, PCs, software and infrastructure management) which the big service providers -- Accenture, ACS, CSC, EDS, HP and IBM -- do, say analysts.

Besides, the Indian IT majors are not as aggressive as MNCs. They mostly confine themselves to the application, development and maintenance and financial accounting space rather than infrastructure management.

The lag factor is even more surprising as strategic outsourcing in the domestic IT sector, especially the Indian telecom space, has assumed huge proportions with the just-concluded $600-800 million deal between Idea Cellular and IBM and the earlier almost $1 billion deal between Bharti Airtel and IBM.

The only big deal ($250 million over 5 years) involving Indian IT majors was in 2005 when Tata Teleservices announced strategic outsourcing of its entire IT infrastructure management to Tata Consultancy Services. However, in this case, both companies belong to the same group.

"Indian IT companies still don't seem to be waking up. And they do not put their best foot forward when it comes to pitching for domestic deals. It will be only a matter of time before the global majors lap up all the Indian bluechip deals across verticals," rues Partha Iyengar, research vice-president, Gartner, adding: "The only worry is by the time Indian IT companies realise the importance of the local market, it should not be too late."

The Indian domestic outsourcing market, considering deal sizes above $50 million, is estimated to be around $2.2 billion. Wipro appears to have made inroads in the domestic space through its deals with a few banks. HCL and TCS are making slow progress and Satyam, Infosys are just about starting up.

"Indian players are getting into it but they need to scale up that part (infrastructure management) of the business to compete with the likes of IBM and HP," says Global partner in-charge, sourcing advisory, KPMG, Pradeep Udhas. He adds that deals of this size involve risks and responsibilities.

Alok Shende, Director IT, Frost & Sullivan, concurs, "To do deals like this, you need a strong balance sheet. Indian companies are very silo-based in their approach. They are more likely to concentrate on project-based activities in India."

Leslie D'Monte in Mumbai
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