Even as Indian information technology (IT) services firms are cautiously looking at macroeconomic uncertainties, a recent survey by Citigroup gives a bleak outlook on IT spending for the rest of the calendar year 2011.
The survey by Citi Investment Research & Analysis, a division of the Citigroup Global Markets, says the chief information officers (CIOs), especially in the US and Asia, are anticipating lower IT budget growth in the last quarter (October-December) of calendar year 2011 (this is third quarter of financial year 2011-12 for most Indian IT firms). "CIOs are holding back less budget than a year ago and therefore a strong Q4 flush appears less likely than last year," says the survey.
Among the project deferrals that are expected to happen in the technology space, call centre outsourcing is a top candidate for deferral in the US and Asia, whereas in Europe, it is the second candidate for deferral. CIOs of the global firms said server consolidation and virtualisation, application and business intelligence software, network security and cloud were their top four priorities for implementation.
The study conducted among 260 CIOs across Europe, the US and Asia, said the outlook in Asia remained stronger than both the US and Europe. The CIOs in Asia expects 28 per cent growth, whereas the same is 0.1 per cent in the US and 0.9 per cent in Europe.
Indian IT services companies have long been trying to diversify into newer growth geographies in the Asia-Pacific regions, apart from increasing their focus on continental Europe as part of their derisking strategy. This view was echoed more during the global economic downturn.
"Europe is the new focus area for the company and we will invest more to grow the European business in the UK and the continental Europe," S D Shibulal, CEO and MD of Infosys, told Business Standard in a recent interview. He had said the company was focusing on growing those markets amid the present uncertainty.
The survey also said the demand for new applications including analytics and cloud pilots were getting more traction, which is benefitting companies like Accenture and Cognizant. It said the IT vendors who have improved their increased their wallet share in Q3 (Q2 of FY12) include global companies like Accenture and IBM, and Indian IT firms including Wipro, TCS, Cognizant and WNS. Wipro’s wallet share gain in Q3 (Q2 of FY12) was the second highest with an increase of 15 per cent, next only to Accenture which had a wallet share gain of 21 per cent, the CIOs survey said.
