IT firms in Gujarat eye new export markets

While the US may continue to be a focus market for the IT industry in Gujarat, the firms are nevertheless widening their export destinations to new territories. 

Countries like Japan, Denmark, Sweden and South Africa have caught the fancy of IT companies in Gujarat in the recent times. Apart from offering deals in euros, pounds and Australian dollars, these territories are also helping ease the pressure of dwindling orders from the western market.

“The US will continue to be a focus market for IT companies in Gujarat.  Moreover, currency fluctuations have relatively stabilised. But the US and many European markets have been under economic pressures. Some of the new markets are emerging who are looking at outsourcing for the first time. This is helping, in a way, to reduce our dependence on the US market,” says Rajan Vasa, chairman and managing director of Contech BPO Services Private Limited.

According to Jaimin Shah, the newly elected president of Gujarat Electronics & Software Industries Association (Gesia) and founder director of Dev Information Technology Pvt. Ltd., countries like Japan, Australia, Denmark and South Africa are some new markets that Gesia member firms are exploring.

“These new territories deal in euros or pound where there is less currency fluctuation. Moreover, too much dependence on the US market can cost dearly since the market has been under pressure,” says Shah.

However, the shift in market share to Indian companies in these markets is around five per cent. “But even a five per cent change in market share is worth billions of dollars,” argues Vasa.

In the case of Vasa’s Contech BPO, a 100 per cent export oriented unit (EOU) which catered completely to the US market for last two years, the share has come down to 55 per cent to the US and 45 per cent to 12 other countries including Germany, Switzerland, Denmark, Sweden, Belgium and Australia. “Similarly, while the US used to contribute about 65 per cent to IT exports in Gujarat, it may have come down to 55-60 per cent, but even that is significant,” Vasa adds.

The other factor that is working in favour of the new markets is the growth.  “Orders have been pretty much stable or even dwindling from the US as of now, though there is still lot of scope for India to grab quality orders from the country,” says Pranit Banthia, CEO, Hi-Tech Outsourcing. 

Rather, according to Vasa, the new growth is coming from other countries. “It is also because some of them have just begun outsourcing so that they can focus on their core competencies,” he adds.