 "IT highest paid sector in India, manufacturing far behind")
According to a recent Gartner report, India software revenue is forecast to total $5.8 billion in 2017, a 12.8 per cent increase from 2016 estimates of $5.2 billion. This is in comparison to Gartner's forecast for 2017 global spending for enterprise software will be $357 billion in constant US dollars, with growth of 7.2 per cent over 2016. Gartner also said India is the fastest growing market in terms of IT budget spends.
"India as a region has been like a step-child to the Indian IT services, though its continues to be a step child, the intensity has reduced. Indian enterprises however are facing similar challenges that their global counterparts are facing as they deal with digital disruption. But the digital disruption has come on to the Indian IT players much sooner than later and the opportunities that it provides is much more globally. So how much will the Indian IT players look at India is a guess," said Partha Iyengar, Gartner Fellow and head of research at Gartner India, at the recently held Gartner Symposium.
Many players have blamed the slow penetration into the domestic business to structural issues, which include, low margins, fragmented market, price sensitivity and project-based deals than annuity business. Many say one of the most important reason is low margins. "A US or international client is charged $25-26 per hour, in India you can only charge Rs 6,000 - Rs 10,000 per day for equivalent resources," said a senior industry spokesperson.
"If you are saying there is a structural issue then they need to create a very demarcated strategy. Wherein a senior leadership is responsible for the growth, that they also fiercely compete internally for talent and resources and have access to the same and also compete with other geographies," added Iyengar.
Analyst also concur that though the Indian IT market is very small compared to other major markets, with rising global uncertainty having an India strategy will help. Especially now when the Indian market is looking for accepting the digital strategy.
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Sudin Apte, founder and CEO of Offshore Insights believes that having a different team for India will perhaps allow them to increase their penetration.
Among the players Tata Consultancy Services (TCS) was one of the most serious players in the domestic market but so far the company has focused on the government sector. Rather that's what most of the companies have done, focus on government sector. Infosys and Wipro too have followed a similar strategy.
For TCS however, the India focus has come down over the last few years. From the high of 9.2 per cent in FY11, India's share in the company's revenue has come down to 6.2 per cent in FY16. The company in the past has accepted that it has reduced its pace of growth in the domestic market as due to long sale cycles and delay in payments. For Infosys, India is a mere 2.6 per cent of its revenue and Wipro which clubs Middle East and India together the percentage is 10.8 per cent for FY16.
Partha also adds that the Indian players should try and work with the enterprise segment more. "The government as a total of the IT budgets globally is a small player. So is the case in India. In the recent past however, the Indian government has become a big spender. But global players like IBM, Accenture and Capgemini have done well here," he added.
While the top tier-IT players are de-focusing from India, mid-cap players like Persistent Systems are targeting the domestic market with a clear strategy.
The Pune-based company has been working on its India strategy for the last one-and-a-half years and started reporting India revenue numbers from the first quarter of FY17. "We believe there are white spaces in the government in particular and in India general which need to be tapped. At present, it is very negligible in terms of revenue contribution but in the next three-five years we expect India should be a significant chunk. By significant we mean upwards of five per cent," said Mritunjay Singh, executive director and president - services, Persistent Systems in an earlier interview with Business Standard.
Singh also elaborates that the strategy for tapping into the government sector is slightly different than what other services players have done. Persistent is approaching these contracts as projects rather than services. "We realised that it is easy for the government to buy an IP or package solutions rather than services. It allows then to price it. We have invested in creating pre-built packages or platforms that are plug-and-play and address point issues or help them create platforms," added Singh.
