Indian IT Companies far from being global players: KPMG official

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A high rise headquarter complex of a leading IT company based in Bangalore, southern India. Photo - BangaloreReviews.com

According to Bryan Cruickshank, global head of IT advisory consulting firm KPMG, Indias IT companies and BPO industry has crossed $100 billion mark but the country has still a long way to become truly global power house.

Indian IT companies are not truly global companies. Companies like TCS and Wipro have demonstrated that they scale, but they havent demonstrated that they are global,Cruickshank saidin an interview.

The IT sector, which had the revenues of $101 billion in the current fiscal year, employs around 2.8 million people in India while contributing 7.5 % to Indias GDP and having a 25% share of total exports. Currently, the IT sector does its business in 70 countries around the globe and employs 40,000 non Indians.

However, Som Mittal, president of industry group National Association of Software and Services Companies, is confident that the industry will get 80% of its next $100 billion from new geographies and industries.

Although, Mr. Cruickshank agreed that industry has achieved a lot in these years, he warned that customers see them as providers of IT services and not someone they are necessarily tuning to transform their business. “They dont have a lot of innovation so dont see them as truly transformational, he said in the interview.

According to NASSCOM, companies continue to be attracted to India because here they can find employees at the lowest cost.
However, Mittal of NASSCOM insists the model of sector has always been to do it cheaper, faster, better, and companies now are going beyond that to focus on the outcomes of their clients.

A LOT OF WORK

Cruickshank says Indian companies need to recognise local business environment and embrace peculiarities of the market. Language, according him is the easiest step to deal with but companies need to do a lot more than that. This means companies need to embrace local laws and regulations, the political environment, culture, and business practices.

Indian IT sector has a lot to be proud. But its about time to move to the top of the next S curve. Im looking to see who will be the leaders in that, he added.

However, Rajat Mathur, Wipros Ltd chief sales and operations officer for Asia Pacific and Japan, rejected Cruickshank’s statement and said: We have to be a local company like Philips is for instance. I think of it as a company from Kolkata and not from The Netherlands. That is the kind of thing that should happen but were still a young company so well get there in time. We are embracing globalisation.

According to IT analysts, it is nearly 20 years now after the IT boom in the country. No Indian software company has a product gadget of its own. To become truly global, IT companies have to create their own products or solutions addressing core issues faced by India and Indians.

Many critics claim most of the Indian IT companies are not even interested in finding new solutions. In 2008-09, after the global economic slowdown, Indian companies missed an opportunity to acquire assets in US and Europe, which could have helped them in getting intellectual Property (IP) and other products.

Pradeep Udhas, executive director and head of IT and business process outsourcing at consulting firm KPMG said: There was an opportunity there, but Indian IT industry was over cautious. They will have to break out of the current, people-driven, labour arbitrage model sooner rather than later for survival.

NEW MODEL, NEW INVESTMENT

Indian IT companies have started using plush cloud computing, which can target small and medium business. IDC, an IT research firm, expects that cloud computing technology would grow 40% more by 2014, from an estimated $66.7 million in 2009.

Though deep economic troubles are brewing in Greece and other European countries, Indian IT companies are seeing a rapid growth in coming years.

Meanwhile, New Delhis top diplomat in Washington said Indian IT companies have invested more than $26 billion in US and has employed more than one hundred thousand people in the country during the last 5 years.

“Indian companies are now contributing strongly to local state economies in US with the presence of 43 states and having invested $26 billion in the last five years in the several key areas of the economy in manufacturing as also in services,Nirupama Rao, Indian Ambassador to US, said.

While addressing Harvards Kennedy School of Government, she added: As per our estimates, Indian IT companies employ over 100,000 people in the US and the Indian IT supports over 280,000 jobs indirectly out of which about 200,000 are with US residents.

Presently, Indias top five IT companies have 40,000 non-Indian employees working in 60 countries and providing services in 35 languages.

Sources: WSJ, Economic Times

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