Pains in the Indian IT industryEven the weak ruble can not solve the problem, a weak currency, at most, the Indian IT services companies to look more than the opponent Accenture price advantage, but the question is, from all walks of life now and there is no strong demand for IT. In other words, these Indian IT companies are impossible to find customers.
Such as India's first listed company in the United States Wipro, Infosys Infosys and IT technology services company, stock market performance are weaker than India Wisdom Tree Fund Trading Index as of May 25 this year has fallen by 14%. Now, Indian IT services company's profit margins have declined to single-digit percentage points, or will face spending cuts, forced to lay off situation.
Bank of India Kotak's Kotak fund this week released a report, Kotak fund the research model of the Indian IT services company built on the basis of its growth rate is higher than the same industry of the world average of 10% to 12% . Expected according to Kotak fund, the enterprise IT budget is growing year by year, the IT services industry is expected to rise than the current level of 8%.
"Indian IT industry is suffering from the 'law of large numbers'" ("law of large numbers, also known as the" law of averages "refers to the almost inevitable law of the random phenomenon of a large number of repeated often, the modern insurance industry is built on mathematics and physics the meaning of this rule: the more risk the number of units, the actual loss results will be more close to the expected loss may be the result of that derived from an unlimited number of units), Kotak fund said in the report.
Nevertheless, Kotak fund research that the Indian IT industry growth is faster than the global average, but the gap between the two will be smaller. After 20 years of rapid development, the Indian IT and finally to the bottleneck. Investors will also look again at the moment the industry downward pressure, re-evaluate the value of the shares of these companies.
How to get rid of the predicament? To be sure, unless the European economy to growth again, otherwise the growth prospects of the Indian IT industry is worrying.The fact is, at least the next year, the European economy can not see out can have any improvement. Indian IT wants to grow, there is a possibility, and that is through mergers. Kotak fund analysts also mentioned that, in addition, the Indian government is working through the expansion of the orders of government IT services to offset the downturn in the European market to the impact of the Indian IT industry.
But these are hard to short period of time to regain their confidence, and the plight of the Indian IT companies seeking to save themselves, have to think about transition.Business process outsourcing, a new growth point?
EXL Services is headquartered in New York holding company in India, the market value of $ 726,000,000 principal business is the business process outsourcing, said that the downturn is now the European market has long been its CEO Rohit Kapoor (Rohit Kapour) preparedness, the center of gravity toward the United States market.
"Our view is that the IT services business is too large dependence on the customer's IT budget. Customers a year a budget for IT, you can clearly see, this budget is getting smaller and smaller, because the customer's own income reduced the IT budget is based on customer revenue-based, business process outsourcing. We believe that the focus shift from IT to business process outsourcing is wise. "Rohit Kapoor said.
Traditional IT consulting, IT services and outsourcing Indian IT industry, business process outsourcing (Business Pro-cess outsourcing, or BPO), simply, refers to the business processes of the side part or all of the non-core processes handed over to the other party operations. Some or all of the management and operation of process will be transferred to the service provider, the company's limited resources from non-core business freed to focus on core business, thereby enhancing the ability of the customer process automation.
EXL Services, the stock so far this year rose 2.91 percent, outperformed the MSCI Emerging Markets Index. Another Indian-owned business process outsourcing company Genpact Holdings (of Genpact Limited), the beginning of the year rely shares rose 8.7 percent. Compared bogged down, Infosys, Wipro and Tata Consultancy, these focus on business process outsourcing company performance.
Fund Kotak said, higher than the growth rate of the Indian IT industry, the mainstream business company business are undeveloped areas. Kotak is not specified in these undeveloped areas, but it is clear that mainly refers to the business process outsourcing.
Like EXL and Genpact company, now in its services towards specific vertical areas, such as health care and tourism industry, these experts, is through the establishment of a developer-oriented back-end and customer-oriented front-end into the vertical markets.
"Business process outsourcing model was born about eight years, has enormous potential, so the big companies are beginning to open up this business." Rohit Kapoor said, "an analogy, if we have such like American Express customers, we can help customers take care of back-office operations, so that customers will be able to focus on their core business. another example, if customers are insurance companies, we help customers deal with the views of complaints against this, we conducted a pension project of the Fund's insurance clients, our employees are trained to help clients answer any questions policyholders, the insurance industry clients, we have a credit guarantee.
Business process outsourcing market may be a way to bail out these Indian IT companies like Infosys, this field is still a very small market, but Rohit Kapoor expects it to grow to the size of about $ 180 billion, while The annual growth rate of about 5%. According to the Gartner market research firm Gartner Research data, the traditional IT market grew by only 2.5%.
Many large IT services companies are turning to this area, "said Rohit Kapoor," We must be differentiated to establish the advantages of our core strengths to customers on the service-specific vertical areas, such as insurance and banking,competitors do not have experience in these areas and platforms. we can do data analysis for our customers, our company the same as the customer is an international company, will not have the problems of communication and running. transition is not easy. But we are doing pretty good. "
EXL Services, listed in 2006, the average annual compound growth rate of between 25% to 27% last year on revenue of $ 361 million, Rohit Kapoor said, this year's revenue is expected to be $ 445 million. EXL has about 10 009 1,000 employees worldwide, of which about 500 people.
Most large IT business process outsourcing services as a larger portfolio of services provided to customers, especially Tata and Infosys, to provide diversified services company want the EXL such only provide business process outsourcing company, compared to this modes given their pricing advantage.
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