Indian IT firms: Targeting domestic market - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Indian IT firms: Targeting domestic market

Sep 5, 2008

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

India's Top 4 IT Companies are Struggling. Here's Why... (Views On News)

Oct 22, 2021

As attrition rates are unbelievably high, top Indian IT companies are going for big-ticket raises, and much more hiring this year.

Infosys had an Exceptional Quarter Buoyed by Huge Deal Wins. Revenue Guidance Boosts Stock (Views On News)

Oct 14, 2021

Infosys raised its forecast for annual revenue growth to 16.5-17.5% from the earlier 14-16%, predicted in July 2021.

Info Edge: The Anatomy of an Indian Internet Behemoth (Views On News)

Oct 2, 2021

Info Edge is very popular in the Indian startup ecosystem due to its active participation in funding events.

This Indian Company is Tapping into the Huge Autonomous Driving Opportunity (Views On News)

Sep 14, 2021

Despite many challenges, Indian companies and startups have not shied away from entering this space.

4 Indian Companies in the Exploding Drone Market (Views On News)

Sep 1, 2021

The futuristic drone industry in India holds immense promise now that the government has come out with new rules.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

How to Hit Rs 100 Crore Wealth in Your Lifetime (Equitymaster Wealth)

Nov 15, 2021

This is how you can achieve the ambitious goal of a net worth of Rs 100 crore.

Don't Sell these Stocks if the Market Falls (Profit Hunter)

Nov 17, 2021

These are the 3 types of stocks that you should not sell in a market crash.

MobiKwik IPO Opens for Subscription Soon. Key Things to Know Before Subscribing. (Views On News)

Nov 20, 2021

The Rs 19 bn issue is set to hit the market soon.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE IT


Nov 26, 2021 (Close)

S&P BSE IT 5-YR ANALYSIS

COMPARE COMPANY

MARKET STATS