IT majors head abroad over subprime woes

The US sub-prime crisis has prompted Indian IT majors to become truly global. While over 50 per cent of the revenues still come from the US, most of them are moving to markets as diversified as South America, Africa, South East Asia and Australia.

For instance, Tata Consultancy Services (TCS) recently won a $200 million deal in Mexico, Wipro announced the opening of a development centre in Australia, and Infosys announced the setting up of 'The New Growth Engines' business unit in Latin America.

Along the way, they are diversifying their revenue streams, addressing niche segments "" from finance and accounting to engineering, telecom, infrastructure and government "" and deepening their presence in markets outside the US and Europe.

While most of these new centres are being set up as near-shore units to serve either the US or the European market, most of them are now becoming potential market opportunities. TCS is a good example of this.

While the firm might have started to tap the huge talent base with language capabilities in the Ibero-America region but now they are generating good business for the company.

The recent deal in Mexico was the biggest one for the IT giant but the foundation to serve these deals had started long time back.

Earlier this year, TCS gained complete control of the Brazil-based joint venture company 'TCS do Brasil' by acquiring its partner group TBA's 49 per cent stake for a consideration of $33.4 million. TCS do Brasil has over 1,700 employees.

Moreover, TCS expanded its operations in Mexico by launching a global delivery centre in the city of Guadalajara with plans to hire over 500 professionals in the short term.

N Chandrasekaran, executive director and chief operating officer of TCS, said: "Mexico is emerging as a key market for TCS in Latin America. As the strategic technology partner for the Government of Mexico's social security organisation, TCS will bring in global best practices and benchmark standards to ensure excellence in service quality and performance, allowing them in turn to better serve the citizens of Mexico."

Infosys and Wipro are also catching up. Infosys, earlier this year"" in August"" announced the setting up of its first Latin America subsidiary. Latin America is a strong emerging market and one where many of Infosys' clients have operations already.

"Our clients are exploring opportunities to mitigate risk while expanding operations into the burgeoning market. The facility will help us establish our services in the Central time zone which allows us to provide better support to our clients located across multiple geographies," said S Gopalakrishnan, chief executive officer, Infosys Technologies. The Monterrey, Mexico centre will grow to a 1,000 seater capacity.

Wipro has about 8 per cent of its revenue coming from other geographies. While the company's Mexico operations have just commenced, Brazil has close to 200 people.

Rajat Mathur, chief executive business solutions and head of middle east and Asia Pacific regions says, "Yes, the objective of the centre is to provide localised services to our customers in Australia. We expect to have at least 20 per cent local nationals deployed at this centre. It also provides a solid platform to demonstrate competencies & methodologies to prospect customers."