While the credit crisis in the United States would add to the woes of the Indian software industry in the near term, industry watchers say the sector had already begun to lose out on large IT outsourcing contracts?sized at over $200 million?to foreign competition, including IBM and Accenture. There was an uptake of large-scale software exports among multi-nationals in India, while Indian vendors witnessed a slowdown on large contracts?upwards of $200 million, analysts said.
According to some, the reason for the slowdown was the anti-outsourcing, election time rhetoric that prompted the US-based clients to offer the ?high visibility? contracts to non-Indian vendors.
Chief executive of research company Tholons Avinash Vashishta said, ?This calendar, there has hardly been any growth in the number of large contracts among Indian players on a quarter-to-quarter basis. On the other hand, multi national rivals have grown 4% to 5% in terms of large contracts during the period.?
With the US contributing 60% to the revenues for Indian vendors, an election time backlash on outsourcing had hurt the business in India crucially, he added.
Offshore advisory firm neoIT?s senior director (research) Sabyasachi Satpathy said, ?In the last couple of quarters, there has been a strong revenue growth for Accenture and IBM. Indian companies and India are not the only option for clients looking for a near shore-offshore service offering. Compared with competitors like IBM and Accenture, our top three vendors still follow a hub and spoke model, with India perceived as a hub to many overseas operations.?
Nasscom chairman Ganesh Natarajan, however, said the slowdown in large deals was not election-related. ?There is a slowdown on large deals, but it is only because outsourcing itself is on a slow pace. From April onwards, we are expecting to see larger deals coming to Indian vendors,? he said. Indian software vendors would also turn the US credit crisis to their benefit by coming up with more solid solutions to assist the financial industry at a time when it is likely to be restructured, he added.