Europe's a major destination for Indian technology exports

By agencies   |   Monday, 25 July 2005, 07:00 Hrs
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MUMBAI: Europe has emerged as a promising destination for Indian software exports, with almost all top tier companies announcing good growth from this region during the quarter ended June 30, 2005. Companies are bullish on growth prospects here, notwithstanding the recent terrorist attacks in the UK.

Traditionally, the European region has been the largest market for software exports after North America. And, while its status as the second largest market is unlikely to change, business from Europe has increased both in terms of actual revenues and in terms of its percentage contribution to the overall revenues.

For instance, Infosys Technologies, which posted a 36.5% year-on-year growth in topline to Rs 2,071.59 crore, had 23.9 percent of its revenues from the European region in the first quarter of FY06. This is as compared to a 22.2 percent contribution to revenues in the corresponding quarter of the previous fiscal and 23.3 percent in the fourth quarter of fiscal 2005.

In contrast, contribution from North America, declined marginally to 63.6 percent of the total revenues during the just ended June quarter as compared to 65.2 percent in the corresponding quarter of the previous fiscal and 63.9 percent in the fourth quarter of fiscal 2005.

IT revenues of Wipro also showed similar trends with contribution from Europe as a percentage of the total revenues showing a rise, and contribution from the U.S. as a percentage of revenue registering a marginal decline.

For the quarter ended June 2005, revenues from Europe for Wipro were Rs 5.1 billion or 23 percent of Rs 22.61 billion. This is as compared to Rs 346.5 crore or 20% of the total revenues, in the comparable quarter of the previous fiscal. The increased contribution to the topline represents nearly a 50% year-on-year growth in revenues from Europe. USA, on the other hand, showed a marginal decline in its contribution to the total revenues from 53% in the first quarter of fiscal 2005 to 51% in the first quarter of the current fiscal.

Tata Consultancy Services (TCS) was the only firm that did not follow this trend. Europe formed 23.5 percent of its revenues during the June 2005 quarter as compared to 24.1 percent of revenues during the June 2004 quarter.

However, the company made specific mention of the growth potential of the European region in its results analysis. “In addition to the growth in our traditional markets of North America and UK, we are seeing increased momemtum in continental Europe, Middle East and Japan,” it observed. It also said deal sizes in UK were getting larger and as a result, sales cycles were getting longer. Longer sales cycles could be one explanation of why contribution from Europe did not immediately reflect in the June 2005 quarter results as higher contribution to revenue.

At a recent media briefing, TCS MD and CEO, S Ramadorai also clarified he did not anticipate any change in the working enivornment in UK because of the 7/7 terrorist attacks.

Satyam Computer, which announced its results for the June 2005 quarter on Thursday, said revenues from Europe were Rs 188 crore. In June 2004, Europe revenues were Rs 1.18 billion. As percentage of total revenues the higher Europe revenues represent a 2 percent growth from 15 percent in June 2004 to 17 percent in June 2005.

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