Asia-Pacific, Middle East new focus areas for IT services firms


Indian software services exporters have begun sharpening their focus on countries like Japan, China, Malaysia, Australia and those in the Middle East, given the growth potential of these markets. In the June quarter, the top five Indian software services exporters posted an average growth rate of 11-15% in Asia-Pacific and other emerging markets. Growth from the Asia-Pacific region for India’s largest information technology (IT) services company, Tata Consultancy Services Ltd (TCS), was up 34.9% from a year ago and that from the Middle East rose 20% in the same period.

Wipro Ltd, which has been in the Middle East for over a decade, saw its Middle East and India business grow 13.8% in the June quarter from a year earlier. For Tech Mahindra Ltd, India’s fifth-largest software services exporter, the Middle East is a priority due to government-led information technology initiatives, like the recent eight-year engagement it signed with the Dubai Economic Council to provide solutions to make Dubai a “smart city”. Tech Mahindra also has the contract to provide data solutions to power the FIFA World Cup 2018 in Qatar.

The move to emerging markets is logical, given the high growth potential in these regions, even though it is on a lower base, say experts. South East Asia’s competitive and rate-sensitive market allows for smaller deals, especially from countries like Taiwan, Hong Kong, Singapore and Malaysia, which are of particular interest to mid-tier firms, said Ravi Menon, IT analyst with Centrum Broking Pvt. Ltd. Sangeeta Gupta, vice-president of software lobby body Nasscom, said that exploring business in countries like Japan, Korea, Indonesia, China and continental Europe makes sense “as 80% of incremental revenue is projected to come from these markets by 2020”.

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