India’s software companies say 2010 will mark the beginning of the next boom in the information technology sector, but data from TPI, the Texas, US-based advisory that structures one in three outsourcing deals globally, show things ain’t as roseate.
Fresh business is still hard to come and restructuring of existing contracts remains the chief source of revenue, TPI said.
Restructuring involves deals where clients renew, renegotiate or expand existing contracts.
TPI’s January-March 2010 Global TPI Index shows that contract restructuring accounted for 42% of total contract value outsourced in the quarter, far surpassing the 29% share such deals had in 2006.
As many as 109 contracts worth $19.5 billion were outsourced globally, down 21% year on year, in the first quarter. Also, there were fewer awards valued at over $200 million.
It suggests the information technology market is recovering at a slower pace now than in the middle of last year.
“The real story in the first quarter of 2010 was the large amount of restructuring activity, which greatly impacted a variety of key outsourcing metrics,” said Mark Mayo, partner and president, global operations, TPI. “The underlying market is recovering at a much slower and more uneven pace than those heady growth rates would suggest.”
Top Indian firms that vie for global outsourcing contracts have indicated greater demand coming up in 2010.
While India’s No 2 software maker Infosys Technologies has estimated a 16-18% rise in revenues in dollar terms for the current fiscal, the largest software maker of the country, TCS, aims to recruit at least 30,000 professionals to build capacity to meet the growing demand this fiscal.
“The recovery is definitely there, albeit gradual. Then we have some of the markets like the UK, where we will get a clear picture after the elections. We have the rest of Europe which will come up from the uncertainty in some time. These will add to the growth projections the industry is talking about,” said Ganesh Natarajan, member of IT body Nasscom’s chairman’s council and CEO of Pune-based Zensar Technologies.
The sourcing advisory firm anticipates restructuring activity will continue at an above-average level for the rest of 2010 even as more new contracts are added to the pipeline.
In 2010 alone, the advisory firm estimates, between $10 billion and $12 billion worth of annual contracts will come up for renegotiations. TPI’s Q1 coincides with Q4 for most top IT firms in India, which account for about 4% of the global IT services market.
Source:http://www.dnaindia.com/money/report_data-fail-to-back-big-it-recovery_1375544
