‘W. Europe next growth target for IT majors’

New Delhi, June 12 Western Europe is expected to become the next frontier for growth of top India-based offshore providers Satyam, Wipro, Infosys, TCS, Cognizant, and HCL Technologies, who have cornered 1.9 per cent of the Western European IT services market in 2007 compared to 1.5 per cent in 2006.

TCS, Wipro and Infosys now occupy market share positions within the top 50 of Western European service leaders, according to Gartner.

“Since 2001, each of the India-based service providers has made strong advances in the worldwide, US and more recently, Western European marketshare rankings. The India-based providers in general have not penetrated the Western European IT services market to the extent they have in the US market, but all indications are that this is the next target growth area for offshore services,” Mr Arup Roy, senior research analyst, Gartner, said.

According to Gartner, in Western Europe market, the IT services revenue for TCS grew 45.2 per cent, for Wipro 53.1 per cent, Infosys 45.3 per cent, HCL 54.1 per cent, Satyam 55.6 per cent and Cognizant 86.8 per cent, year-on-year.

Gartner had recently pointed out that the top six India-based offshore service providers - collectively referred to as the ‘SWITCH’ companies (Satyam, Wipro, Infosys, TCS, Cognizant and HCL Technologies) - ramped up their collective share to 2.4 per cent in the total worldwide IT services market in 2007 (1.9 per cent in 2006).

Collectively and individually, this group of companies has achieved growth rates that have outpaced the rest of the market.

Although these providers had started off with application services market, over time each had evolved their coverage of the services market to a broader base such as infrastructure services.

Gradual diversification

“While application development and management services remain the bulk of their revenue stream, there is a gradual diversification in other service lines, such as consulting and remote infrastructure management services, where they have experienced high growth. Expansion of service offerings by India-based providers has enabled them not only to build and mine existing accounts, but also to increase visibility as full-service providers. Consequently, they are now regularly invited to bid for larger and more-complex outsourcing contracts, requiring multiple services,” said Mr Roy.

TCS maintains lead

TCS maintained its position as the largest of the India-based IT services vendors worldwide in 2007, rising from a ranking of 35 in 2006 to 28 in 2007 on revenue growth of 34.8 per cent (in terms of dollars).

While TCS’ growth was slightly below average for this group of vendors at 38 per cent in 2007, it grew more than three times the growth rate of the total market on revenue of $3.8 billion in 2006.

According to Gartner, the next one year would be challenging for this group of India-based providers as the gap between them and the traditional service providers in terms of global delivery competencies and multi-country delivery sites is narrowing.