News

Indian IT majors losing contracts to emerging rivals

By SiliconIndia | Tuesday, 05 January 2010, 02:14 Hrs | 3 Comments

Indian IT majors losing contracts to emerging rivals

Bangalore: Leaving the Indian IT majors including TCS, Infosys and Wipro behind; companies like Ness Technologies of Israel, CPM Braxis of Brazil and Mexico-headquartered Softtek are becoming attractive for top outsourcing customers such as GE, Citibank and several others, reports Economic Times.

At a time when Indian firms are planning to redefine their position as global services providers by growing their presence in the emerging markets of Latin America, Eastern Europe and Asia, they face stiff competition from these newer rivals. "For many customers who already have significant presence in offshore locations like India, it's a risk diversification. Some customers having 70-80 percent of their offshore resources in India are realising that they need to look at the third category of suppliers that are local and niche," said Jimit Arora, Research Director of Everest Group.

Over the last two years, companies like CPM Braxis, EPAM Systems, Ness Technologies, Softtek, Merchants and Spi Global have emerged as stronger rivals for Indian tech firms, especially while bidding for an outsourcing contract being fleshed out by a 'first-time outsourcer'. "When it comes to new business from the first-time outsourcers, these local suppliers may be gaining at the expense of multinational and offshore rivals," said Amneet Singh, Vice President, Global Sourcing at the Everest Group.

CPM Braxis, which counts GE, ABN Amro and Whirlpool as its clients, reported revenues of around $567 million in 2008. One of the top four Brazilian banks, Bradesco, is also among the biggest customers for the company. While these new firms are not yet in the big league of mega, multi-year contracts, they are still able to gain business because of their niche and local market expertise. On an average, these companies are able to win contracts worth $2-5 million in annual contract value. "Many emerging companies we spoke with believe that they can become $1-billion company on their own. However, some admitted that they would be open to inorganic opportunities too," said Arora.

What makes these firms really attractive is their strong presence in some of the fastest-growing markets for software services. For example, Ness generates about a third, or $170 million, of its revenues from Eastern European markets of Czech Republic, Slovakia, Hungary and Romania.

Don't Miss ( 1-5 of 20 )

10 Most Fuel-Efficient Cars in India

10 Famous Athletes Who are Businessmen

10 Cash Rich Indian Companies

10 Hottest CEOs of Silicon Valley

Why is Ambani Supporting a "Fraudst...

Write your comment now

Reader's comments(3)

1: Hi
There more more companies are looking in to outsoucing in the USA. But there is a big question will these jobs goes to India. May not be any more. Since other destinations are giving better deal than India. Companies came to India its because of only cheep labour and not thinking that Indias are guru in IT.

Posted by:ram - 05 Jan, 2010

Report abuse

2: Yeah it seems Indian IT era is slowly fading away and it a matter of time things seem to be slowly drifiting away. This happens in most economies Indian IT has matured and you see a lot of Unsatisfied IT professionals things or mode of working should be changed.

Posted by:dennis - 05 Jan, 2010

Report abuse

3: Indian IT companies have to be alert everytime, as so many new companies are emerging across the world.

Posted by:Babar - 05 Jan, 2010

Report abuse