Indian offshore mkt to grow 15-18% in 2013

North American region to drive sector's growth, even as Europe lags another year

IT services companies, which are facing pressure due to the slowdown in the US and Europe, have something to cheer in 2013. According to a report published by research firm Offshore Insights, Indian offshore business is likely to grow 15-18 per cent, driven mainly by North America, even as Europe lags for another year.

The mood of offshore clients is positive and the spend is likely to grow in the coming year. "While the growth is not as high as it was two years ago, many clients intend to spend more in coming year,” said Sudin Apte, CEO and research Director, Offshore Insights.

 

Around 36 per cent of the respondents that participated in the survey said 2013 would be a somewhat challenging year, while 32 per cent said that the 12 months ahead would be good. Around 267 IT decision makers across North America and Europe participated in the survey. The report claimed that North American decision makers were much more positive than Europe.

For the $70-billion IT services industry, North America is the largest market and contributes around 60 per cent of the total exports. The study also pointed out that the positive mood in North America will increase the IT spend by companies in that region.

“With the positive mood in the market, around 50 per cent of the companies in the survey said they would increase IT spend in the coming year," Apte said. The study also said that enterprise applications, apps integration and modernisation emerge as high growth areas where clients would be ready to spend.

The flip side to this story is clients' dissatisfaction is increasing and many of them feel the Indian vendor typically does not invest enough time and people in the relationship and is not flexible on price model evolution. The study said added that MNC services firms are soon catching up with Indians in terms of cost saving, quality, and software processes.

The Offshore Insights report also said that clients would be looking at a smaller and more cohesive set of service providers in 2013. Several clients are also renegotiating rates with current players and are moving from the time-and-material model to a fixed-price model.