Govt ups IT spends, skeptical on tech firms' loyalty
By siliconindia   |   Thursday, 05 February 2009, 19:02 IST   |    1 Comments
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Bangalore: The Indian government organizations' share of total IT spends in India is set to cross 10 percent over next two years. However, these organizations are skeptical on the commitment of IT companies to the domestic market. "Will they still remain so committed when their offshore business improves?" asked a senior government official, currently evaluating several outsourcing contracts. The organizations including India Post, Indian Railways, ONGC, LIC and SBI will increase their contribution to the IT spends to around $2 billion, with India Post and Indian Railways alone considering deals worth $100-300 million each, reports The Economic Times. LIC is also currently evaluating an outsourcing contract worth almost $70 million, though ONGC and SBI are yet to structure their contracts. However, it would be a Herculean task for the tech firms like Infosys, Wipro and TCS to take advantage of the lucrative opportunity by convincing about their long-term commitment to the domestic market. "Until a few months ago, we were finding it challenging to attract bidders for our RFPs, now everybody is chasing us - we must have a long-term view," said an official involved with an outsourcing decision at India Post. According to research firm Gartner, Indian government organizations, excluding state-owned firms such as BSNL, spent almost $580 million purely on IT services in 2007. The research firm is of the view that the Indian companies should learn from their MNC rivals who are reaping enough of profits from the domestic market. "If IBM can have a profitable domestic business, why can't they emulate the same? Indian providers need to learn and shift their focus, as they are still chasing more complex and the biggest opportunities, instead of smaller, strategic deals in the country," said Partha Iyengar, Head of research (India) in Gartner.

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