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Premier location: Yes, India has become
one for offshore IT services |
Global
it giants like IBM, EDs and accenture seem to be losing their
vice-like grip over large transactions in the international it
outsourcing market. And India and Indian companies are beginning
to make a noticeable mark in this space, though the absolute figures
are still comparatively small. According to statistics from TPI,
the Woodlands, Texas-based global sourcing advisory firm, India-based
vendors accounted for 5 per cent of all global outsourcing deals
in the first half of 2006, up from 1 per cent in 2004. In absolute
terms, they won 11 deals worth $1.74 billion (Rs 8,004 crore).
This means India-based companies are also winning bigger deals-the
average deal size has risen from $128 million (Rs 576 crore then)
in 2005 to $159 million (Rs 731.4 crore) this year. More significantly,
the share of the global giants tumbled from 71 per cent to 54
per cent between 2004 and 2006. But these stats, as is their wont,
hide much more than they reveal. "Though the share of India
has increased over the last few years, 73 per cent of these deals
were awarded to the local arms of MNCs," says Siddarth Pai,
a partner at TPI. This indicates that homegrown Indian companies
have gained comparatively less than what the headline figures
seem to suggest.
While acknowledging the growth of India and
Indian vendors in the global it market, Steve Heidt, Vice President,
EDs, says global vendors will continue to bag most large contracts
in the foreseeable future. "Companies such as ourselves have
a much larger global presence (than Indian companies) and, therefore,
the ability to win and execute large, potentially multi-billion
dollar, deals," he says.
"Nevertheless, large Indian vendors have
achieved significant growth and are beginning to win larger and
more varied deals," counters Pai. They are also competing
for a much larger slice of the global outsourcing pie than before.
TPI data shows that the value of contracts that Indian companies
are vying for is 284 per cent higher than last year. "India
is today established as the premier location to undertake offshore
it services and we believe we are ideally positioned to leverage
the country's cost and quality merits," says Kris Gopalakrishnan,
Joint Managing Director, President & coo of Infosys Technologies.
Despite
the hype over it outsourcing, it's actually the business process
outsourcing (BPO) sector that is growing faster in the first half
of 2006. According to the TPI report, a record 92 contracts (compared
to 58 last year) valued at $11 billion (Rs 50,600 crore) were
signed globally in the first six months of 2006, an increase of
20 per cent compared to the corresponding period of last year.
Financial services leads the way with 27 contracts valued at over
$4 billion (Rs 18,400 crore) and accounts for almost 40 per cent
of the market. "The BPO market is beginning to mature,"
says S. Nagarajan, coo of 24x7 Customer, a Bangalore-based operator.
It is difficult to pinpoint the exact share
of Indian vendors in BPO deals, but Pai, who tracks deals over
$25 million (Rs 117.5 crore), says they now have a very noticeable
presence in this market. "We are winning big global contracts,
and are ramping up our technological capabilities," says
Wipro Technologies' Chief Strategy Officer Sudip Nandy.
Despite the recent high-profile withdrawal
of companies such as Apple and UK-based utility Powergen from
India, TPI believes that there is little evidence to suggest that
clients in the West are dissatisfied with Indian vendors. "Our
data predicts further growth in the value of work being moved
offshore," says Pai.
INSTAN
TIP
The fortnight's burning question.
The Delhi High Court has ordered the
government to implement CAS in Delhi, Mumbai and Kolkata by December
31. Will it make television viewing more expensive for most Indians?
No. Jawahar
Goel, Director & Vice President, Indian Broadcasting Foundation
It will give viewers the choice of watching
what they want. CAS is just another medium of delivery. Its implementation
will help sort out the issue of under-declaration.
No. K. Jayaraman,
CEO, Hathway Cable & Datacom
CAS will be a cheaper proposition for people
who want choice. If all you want to watch are free-to-air channels,
you won't have to cough up the Rs 250-300 that you have to today.
No. G. Krishnan,
CEO & ED, TV Today Network
The average monthly expenditure on cable television
per family is Rs 200-250. Introducing CAS will let viewers pay
only for the channels they choose to watch. Thus, for most households,
the cost may actually come down.
-Compiled by Aman Malik
Q&A
Education Quality Is An Issue
Vivek
Wadhwa, 49, is adjunct Professor
at the Pratt School of Engineering at Duke University. Prior to
this, he ran two hot start-ups, Seer Technologies and Relativity
Technologies. Wadhwa tells BT's Rahul
Sachitanand that India is graduating fewer quality engineers
than is required to stay competitive in the global market. Excerpts:
You recently said the US produces more
engineers than India and China. Is this correct?
Our report said a total of 134,406 engineers
graduated in the US last year, 112,000 in India and 351,537 in
China. A vast majority of Indian engineering graduates are in
it. The difference: in the US, about half are in traditional engineering.
What are the long-term repercussions of
this?
India is graduating fewer engineers than it
will need for its long-term economic development. The vast majority
of them are from colleges that rely on rote learning and their
curriculum is 20-30 years out of date.
Why is this relevant?
The graduation rate of engineers is a measure
of global competitiveness.
What should the government do to solve
this problem?
The best thing the government can do is to
leave the universities alone and give them the funding and freedom
to innovate and modernise.
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