Indian IT Majors / MNCs Bet Big On India’s Domestic IT Market
posted in Outsourcing to India |Source: Economic Times
While, most of India’s IT majors started-off and established themselves as services providers to Western firms, increasingly the appeal of lucrative deals the domestic market also offers has begun to attract.
And so, India’s domestic IT market is luring not only larger IT players, but multinationals, as well. Soon after, Infosys Technologies announced, it will be re-considering its strategy to remain focused on IT services and BPO exports, Mastek, another Indian software firm is considering doing the same. A mid-size IT solutions and services player, Mastek has set up a separate business unit alongside, which is intended for sole servicing of the domestic market. In addition, an experienced professional, with a career spanning 22-years has been recruited to head it and ensure a focus on domestic IT needs.
Entering the domestic market for a second time, the Rs. 700-crore Mastek started out as an IT products firm in the 1990s, when nearly 70% of its revenues came from the domestic market. Later on, however, it reduced its focus on the Indian domestic market IT needs and diversified into services and solutions. Currently, less than 1% of its revenues come from the Indian market.
Just as, Infosys has been selling its core-banking product Finnacle in India, Mastek too is marketing its insurance solution Elixir, country-wide. “We are the leaders in channel management in India – we have 7 of the 15-insurance firms in India as our customers,” says CMD Sudhakar Ram. However, now the focus will be on services and solution offers for the domestic market, including targeting a 10% increase in domestic revenues, over the next 3-years.
While, catering to domestic clients will de-risk its geography mix, as currently Mastek is highly dependent on UK, Ram says it is to be in direct touch with the end customer that is one of the drivers behind the move. “The Indian market will give us direct exposure to the customer which is not the case in the other markets, so the learning will be enormous,” he informs. As well, this will also allow Mastek to access the foreign parents of the some of the insurance companies functioning in India.
In keeping with this, Mastek’s domestic business unit will initially focus on the insurance and government verticals, later extending to other service lines. With the government vertical its key revenue area overseas, Mastek intends to focus on the domestic front, as well.
Though, margins from the domestic market are expected to be only half that of 6 – 7% of international business, however, learnings from domestic projects will add up, giving higher leverage at company level.
With the rupee strengthening against the dollar, this could be expected, as outsourcing firms make up the shortfall in revenue by picking up domestic clients, of which there will be many, as India works towards its goal of becoming a technologically advanced nation.
