X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Indian IT firms: Targeting domestic market - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Sep 5, 2008

    Indian IT firms: Targeting domestic market

    The Indian IT industry is bearing the brunt of financial crisis and economic slowdown in the US as it derives maximum outsourcing revenues from the US. In wake of the economic slowdown, the software industry association body, NASSCOM, has projected software industry to grow at a lower rate at 21-24% in fiscal FY09 as against 28% in FY08.

    The dynamics of IT industry is changing and IT firms are now preparing themselves to meet new challenges. Traditionally, Indian IT firms have been deriving sales from the Americas and Europe but going forward, the CAGRs of these regions will be low where as the Asian market is expected to grow at a very fast pace and approach the market size of the European markets by 2011. The emerging Latin American and Middle-East/African markets, though smaller in size, are also expected to have a higher CAGR. The growth in the Asia-Pacific Region is expected to be higher mainly on account of growth in spends in China and India.

    As per NASSCOM, the Indian IT-BPO industry continued to grow much faster than the global IT services industry, clocking a CAGR of 31.2% since FY 2004. The Indian IT industry is estimated to have grown to US$ 64 bn in fiscal 2008 from US$ 13.3 bn in FY04 (CAGR 31.2%), and during the same period, the domestic market business has grown to US$ 23.2 bn from US$ 8.3 bn in FY04 (CAGR 29.3%). As indicated in the chart, the Indian Domestic Market is growing as robustly as the export of IT services from India.

    India is the fastest growing market in the overall Asia-Pacific region with compound annual growth rate (CAGR) of more than 18.6%. As per Springboard Research, the market segment, which is expected to witness the highest growth in India, is - infrastructure services. Infrastructure services segment is estimated to grow to US$ 4.27 bn by 2011. This will translate into 14% market share of the overall Asia-Pacific market. Infrastructure services is likely to grow at faster rate because it plays a critical role in business transformation, which includes mainframe centric solutions, desktop and distributed computing, network operations and monitoring, asset management, service delivery management, e-commerce and collaborative computing.

    The other segment, which is expected to grow significantly, is applications services. This segment is expected to grow at a CAGR of 19.6% and will remain the most developed market segment in the Indian IT services space. Another segment, IT consulting, is estimated to grow to US$ 0.40 bn by 2011 compared to US$ 0.22 bn in 2007. Meanwhile, the overall applications market is expected to grow at CAGR of 19.6%, to represent 16% of the Asia-Pacific market by 2011. The application hosting services will grow at a CAGR of 21.2% mainly driven by small & medium business enterprises.

    This growth of enterprise IT outsourcing in India is expected to fuel the surge of IT consultancy services, which currently occupies just 5% of the overall market. There is vast opportunity in consultancy projects from government projects and e-governance project in the domestic market, which is being exploited by software firms.

    Conclusion
    Indian software firms are targeting domestic markets aggressively to drive their future growth. Indian IT companies are increasingly focusing on expanding the breadth of their service offerings and capabilities to become a full services provider, which entails entire value chain of IT - from consulting to products and solutions and from implementation to support.

     

     

    Equitymaster requests your view! Post a comment on "Indian IT firms: Targeting domestic market". Click here!

      
     

    More Views on News

    Tech Mahindra: Our Revised View (Quarterly Results Update - Detailed)

    Aug 2, 2017

    A better than expected turnaround in performance results in a change in view.

    Wipro: A Decent Start to the Year (Quarterly Results Update - Detailed)

    Jul 27, 2017

    Digital services drive growth for Wipro in 1QFY18.

    Infosys: A Decent Start to FY18 (Quarterly Results Update - Detailed)

    Jul 14, 2017

    Infosys starts FY18 on an encouraging note with a stable performance.

    Ankit Shah's First Five Insider Recommendations (The 5 Minute Wrapup)

    Aug 5, 2017

    How to get exclusive insider recommendations from Ankit Shah.

    TCS: Currency Volatility Plays Spoilsport (Quarterly Results Update - Detailed)

    Jul 14, 2017

    TCS starts FY18 decently despite an adverse currency impact.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    S&P BSE IT


    Aug 18, 2017 (Close)

    S&P BSE IT 5-YR ANALYSIS

    COMPARE COMPANY

    MARKET STATS