Economic gloom dogs market

The Americas market has been a mixed a bag for the Indian information technology and BPO industry in the quarter ended September 2012.

This market, which contributes the bulk of revenues for IT and BPO firms, reflected the subdued global economic situation.

It contributes over 50 per cent of revenues of all major firms, making it the most crucial element in a company’s business strategy.

“We are expecting a better growth for the industry in the second half of the financial year. In the last year, the first half was good and the second half was not. There was a slowdown in the second half that had continued in the first half of this financial year. We expect it to pick up in the second half but there will be no dramatic increase,” B. V. R. Mohan Reddy, Executive Council member of Nasscom and Chairman and Managing Director of Infotech Enterprises, told Business Line.

TCS positive

For Wipro, the contribution (as percentage of revenues) of Americas remained the same at 51.5 per cent as against 51.7 per cent. Sequentially too it remained at that level. It reported a lower pie share from the European market with 28.2 per cent (28.8 per cent).

The North American business contributed 52.8 per cent of Tata Consultancy Services’ (TCS) total revenues in the quarter as against 53.4 per cent in the corresponding quarter last year. Its UK market reported a higher share of 17.1 per cent (15.5 per cent), continuing the 17 per cent share it reported in the first quarter of the present fiscal.

“Barring the usual things that you will see in the third quarter (holidays in the US), I don’t see any thing negative about the business environment. We are quite positive,” N. Chandrasekharan, Chief Executive Officer of TCS, told analysts during the second quarter earnings call.

Infosys too reported a lower share from the North American market with 63.9 per cent revenues coming from this market as against 65.3 per cent in the same quarter last year. The last 12 months too showed a lower share from the US market at 63.5 per cent (64.5 per cent). The European share went up to 21.9 per cent (20.5 per cent), followed by the rest of the world with 12.6 per cent (12 per cent).

The industry, however, doesn’t expect political headwinds in the US. “Barack Obama, who was re-elected President of the US, won’t do anything dramatic (that hurts the outsourcing industry) immediately. The European Union has not recovered as yet,” he said.

(This article was published on November 21, 2012)
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