US, Europe crisis worrisome for IT growth: Ramadorai
Communications and IT minister Kapil Sibal wants the $76-billion Indian IT industry to grow more than threefold and be worth $300 billion by 2020. Shrenik Avlani reports.india Updated: Oct 10, 2011 14:17 IST
Communications and IT minister Kapil Sibal wants the $76-billion Indian IT industry to grow more than threefold and be worth $300 billion by 2020. But the economic environment in the US and Western Europe, from where more than 50% of revenue for Indian IT players including the big three - Tata Consultancy Services (TCS), Infosys and HCL Tech - come, is under stress and may affect growth of the sector.
TCS vice-chairman and mentor and adviser to the Prime Minister, S Ramadorai, warned the situation in the West, both the US and Europe, is worrisome. Though the margins are likely to remain untouched, the slowdown and delay in the spending might impact growth of the IT sector going forward, he said.
"To start with, Europe is a worry for sure. How does it play out whether it's euro crisis, Greece implications, Italy implications, etc one has to see. The implication so far has been a cautious watch and to see how the spending of money or how the clients are going to behave," Ramadorai said. "US is slightly different in the sense that US corporations are definitely using technology in a big way, deploying technology-based systems.
The former TCS CEO said that the thing that has slowed down is the whole M&A activity which may result in re-engineering or integration of systems. "But cost and value equation plus innovative ways of reaching out to the customer to get that order, the front-end system, the analytics of the back… those are still playing out very much."
Ramadorai said, the Indian IT companies need target niche areas, based on their capabilities, when looking for orders in the West. He, however, said companies ought to work in Europe in a cautious manner and look at the emerging markets, including India, for growth.