The Hindu Business Line : Tech sector growth pace to continue

With about $45 billion to $50 billion worth contracts coming up for renewal over the next 12 to 18 months and the Indian outsourcing base getting stronger, there could not have been better way to end year 2006.

A cross section of experts in the tech sector opine that the momentum would continue even though there are some pointers to some marginal slowdown in technology spending in the US, which continues to be the biggest market for IT vendors.

The Vice-President Research at Gartner, Mr Partha Iyengar, said that the year is set to end with a growth rate of about 27-30 per cent and the next year would be no different. This is because, not only have the Indian service providers, both Tier I and Tier II consolidated their operations, significantly, multinational corporations continue to expand in India.

"These larger outsourcing deals have found new patterns of sourcing from vendors. Typically, they will go the ABN Amro way, where there will be one large vendor and the rest to be allocated to two-three other service providers. This is because of the nature and scope of engagement and the technology capabilities companies bring to the table," Mr Iyengar told Business Line.

So will we see an Indian company bagging a say $1 billion deal? It is unlikely, says Mr Iyengar.

This is because outsourcers would not like to bet on a single service provider with revenue of $1-3 billion. They would rather prefer to outsource from more than one for greater comfort level. Significantly, one may see the prospect of tier II companies coming together for some projects."

Asked about the impact of the reported slowdown in US tech spending at a recent ISB meet, the President of Nasscom, Mr Kiran Karnik, had said, "Whenever there has been slowdown, the Indian technology sector has benefited. After 9/11 slowdown, India witnessed the emergence and growth of Indian BPO companies. We expect similar thing to happen for the services industry now."

The Satyam Senior Vice-President, Mr Virender Aggarwal, told Business Line after the launch of their Malaysia centre that the hub and regional service model is likely to get popular.

SOFTWARE AUTOMATION

"The other trend that could potentially change the way the technology sector functions is the automation that could play a vital role in software coding. It is to be seen as to what impact this could have on Indian vendors for whom about 70 per cent of the revenues comes from software coding.

Since this is getting automated and probably commoditised, its impact could be felt beyond 2007," Mr Iyengar said.