Indian IT cos on deal hunt amid slowdown
As these firms know that overall IT market will not grow, they are looking at expanding their market share
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Large Indian IT firms are chasing clients of global firms like Atos, Kyndryl, DXC Technology and others. Companies understand that market share can be increased even in this subdued market, leveraging higher offshoring and new technology offerings - Pareekh Jain, IT outsourcing consultant & Founder of Pareekh Consulting, tells Bizz Buzz
Eyeing More Mkt Pie
- Demand environment declining
- Competition becomes intense to win deals
- Mid-tier IT firms looking at winning smaller clients of large IT cos
- In Dec qtr, Indian IT firms gained market share as compared to global counterparts
Bengaluru: IT industry is witnessing intense pressure to win new deals, leading to a situation where large Indian IT firms are chasing clients of their European counterparts, while mid-tier IT firms are trying to win clients of their large peers.
Experts said this phenomenon is playing out because global IT outsourcing industry is growing at a slower pace and each company is keen to grow its market share at the cost of others.
“Large Indian IT firms are chasing clients of global firms like Atos, Kyndryl, DXC Technology and others. As these firms know that overall IT market will not grow, they are looking at expanding their market share. These companies understand that market share can be increased even in this subdued market, leveraging higher offshoring and new technology offerings,” Pareekh Jain, an IT outsourcing consultant & Founder of Pareekh Consulting, told Bizz Buzz.
“Many mid-tier IT firms are going after smaller clients- in the range of $10 million-$50 million- of large IT companies,” he added.
Sources in the know said smaller clients don’t get enough & adequate attention from these large IT vendors as more resources are diverted towards servicing bigger clients. Therefore, these smaller clients are being chased by mid-tier firms for increasing their deal pipeline.
In a recent report by BNP Paribas, the brokerage firm said that in dollar terms, India-based IT firms’ revenue growth continued to slow down and grew by 0.8 per cent year-on-year in the December 2023 quarter. However, it noted that India-based companies added 36 basis points in revenue market share year-on-year basis though they lost 27 basis points on a sequential basis.
So, the report showed that despite a declining demand environment, Indian IT firms are improving their market share as compared to many of their global counterparts. “It doesn’t matter whether market grows or not because the share of Indian IT firms is likely to grow. This is because the market share of Indian IT firms is yet to hit 50 per cent of the total market size. So, there is space to grow,” said Jain.
After posting double digit revenue growth numbers in FY22 & FY23, most Indian IT firms are likely to post revenue growth in mid-single digits in FY24. Things are not likely to change significantly in FY25, though management of different companies have indicated of better demand environment towards the second half of next fiscal year.
