BENGALURU: Indian IT<\/a> services firms have seen a decline in revenue over the past four quarters from local customers as they see an inconsistency in business from the government, the largest technology spender, holding back growth in the country.
Tata Consultancy Services, India’s largest IT services provider, saw revenue slow down to 5.6% in the quarter ending September from 6.3% a year ago. Infosys, its smaller rival, saw business from India drop to 2.5% from 3% in the same period. HCL<\/a> Technologies and Tech Mahindra<\/a> did not disclose revenue for India separately.
Wipro has restructured its India business with two business lines — public sector focused on government contracts and the other targeting enterprises. The three firms have seen revenue slow down in the region. National Association of Software and Services Companies (Nasscom<\/a>), India’s software lobby said that the government business has been saddled with procurement issues and challenges that have deterred companies to take up contracts. “As we look at the India market, one concern is the government business where companies had invested and there were procurement issues and challenges.
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BENGALURU: Indian IT<\/a> services firms have seen a decline in revenue over the past four quarters from local customers as they see an inconsistency in business from the government, the largest technology spender, holding back growth in the country.
Tata Consultancy Services, India’s largest IT services provider, saw revenue slow down to 5.6% in the quarter ending September from 6.3% a year ago. Infosys, its smaller rival, saw business from India drop to 2.5% from 3% in the same period. HCL<\/a> Technologies and Tech Mahindra<\/a> did not disclose revenue for India separately.
Wipro has restructured its India business with two business lines — public sector focused on government contracts and the other targeting enterprises. The three firms have seen revenue slow down in the region. National Association of Software and Services Companies (Nasscom<\/a>), India’s software lobby said that the government business has been saddled with procurement issues and challenges that have deterred companies to take up contracts. “As we look at the India market, one concern is the government business where companies had invested and there were procurement issues and challenges.
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Companies are cautious of where to invest in government projects,” said Sangeeta Gupta, senior vice-president, Nasscom. Nasscom, however, is confident of private investments in the IT sector growing in the country. “The second big shift is that Indian enterprises are seeing a stronger adoption of technology because of the digital transformation,” she added.
Technology researcher Gartner<\/a> said that India’s IT spending grew 4.5% in 2018 to $83.59 billion, nearly a third, lower than the 15.8% growth registered a year ago. This was due to a drop in spending on communication services, devices, data centre systems and IT services. In 2019, the total IT spending is expected to grow 6.7% to $89.23 billion on the back of improved IT services business, Gartner said last week.
Indian IT services firms may lose on the long-term business opportunity if they are not consistent in tapping customers in providing services and retaining them. “If you look at the Indian service providers, there is a hot and cold kind of behaviour that Indian clients are very wary of,” said Partha Iyengar, research vice-president at Gartner, at a recent conference.
However, companies said that they are seeing the business grow in India. “India has clocked smart growth for Tech Mahindra and continues to be a focused geography. We are confident of significant growth in our India business over time. Our growth is coming from across the market including the government and smart cities,” said Puneet Gupta, sales head -India, Tech Mahindra. “Over the past 12 months, we have won several marque projects that are helping us boost our growth momentum.” Tech Mahindra did not disclose specific numbers.
Wipro said that while it has split its India business into two, it sees increasing opportunity in the country to sell its new digital services. “It will see some revenue decline as you have been seeing even in the past few quarters as we get out of some of the services which primarily I would call as product-reselling services, productrelated services, feet-on-street kind of activity that we have been historically doing in the India market and some of the tail accounts and customer consolidation that we have done that,” Wipro CEO Abidali Neemuchwala told analysts on October 24.
“So, we are well on our path on the enterprise side, the government and PSU may take a little longer to make that pivot happen.” Mid-tier services firm Mindtree, which earns around 4% of its revenue from India, says that its local business is very narrowly focussed led by partners like SAP, Microsoft, Salesforce etc.
“The challenge is that sales cycles tend to be very long and relatively smaller deals. But it is the market that is embracing innovation. Historically, India adopted technologies that were present across the world. We are beginning to see more customers wanting to do more from an innovation perspective. For instance, Microsoft launched Kaizala which was launched for India, developed in India,” said Rostow Ravanan, CEO of Mindtree. TCS<\/a>, Infosys, HCL Technologies did not respond to queries.
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