Indian IT cos making it big in Middle East

Annual IT spending in the region is expected to grow around 25% in next three years

IT companies have now found a new market in the Middle East (ME) for their products and services. The Middle East contributes to just around five per cent of most of the IT companies' revenues at present. But, the companies are betting big on this region and have already made strategic plans to bank on the growing potential.

Satyam Computer Services Limited, for instance, has been operational in the ME since 2000 and according to Ajith Menon, head of Middle East and Africa (MEA) at Satyam, the ME market is important for Satyam's global strategy.

"Predominantly, a product implementation market, it is extremely adaptive to new technologies and is promising faster growth," he adds.

Sierra Atlantic, an offshore enterprise company has also recently started an office in Dubai and had earlier worked through strategic partners in the region.

"We are expanding our service offerings in this region as we see our business growing to around 15 per cent of our total revenues over the next two years," Yeshwanth Reddy, executive director, Sierra Atlantic Software Services Limited says.

Intelligroup Asia Private Limited that has been working in this region since the last four years also predicts its business in this region to grow by 20 per cent this year.

"Adoption of IT systems in the mid-sized companies is the key to growth in this region. Besides, large customers are now accepting offshore services (development and support ) for cost benefits and business continuity," Srinivasa K Rao, senior director (sales), Intelligroup Asia Private Limited, says.

Market intelligence and advisory firms like IDC too believe that IT spending in the ME region is expected to be around $6.6 billion in 2005. Annual IT spending is also expected to grow between 20 per cent and 25 per cent for the next three years in the ME as compared to less than 10 per cent in the US and Europe.

Therefore, while most of the companies are planning to grow organically in this region, inorganic growth has not been ruled out either. "We may, therefore, look at acquisitions to leverage our strengths in this region. Right now, the next logical step is to set up an office in Saudi Arabia," Yeshwanth Reddy says.

Menon from Satyam also believes that inorganic growth is an integral part of Satyam's global growth strategy and the Middle East would be no exception to that.

"We recently registered a new office in Saudi Arabia and will be actively looking at strategically expanding our points of presence further," he added. Satyam's MEA operations are headquartered at the Dubai Internet City.

Talent, however, according to Reddy is a challenge in this region due to lack of IT education. That is one of the reasons why all the employees working for Sierra Atlantic there, are Indians including expatriates. Intelligroup also has reasons to believe that there is a scarcity of local resources in the ME region.

Localisation of workforce, however, is an agenda that the companies have planned for better growth.