Indian IT yet to tap UK

The UK IT market which is bouncing back after two years of decline is yet to be tapped to its full potential by Indian IT vendors. This is according to Ovum Consulting, a UK-based technology consulting firm.

Speaking at a session organised by NASSCOM in Bangalore on Monday, Samad Masood, an analyst at Ovum said, "The total software and IT services market in the UK is currently at £26.5 billion and during 2004 this market grew at 3 per cent in real terms and overall, we forecast a mature 6 per cent growth in 2005. This type of growth is being witnessed after the IT industry in UK saw a 3 per cent and 1 per cent decline during 2002 and 2003. There is a huge potential for IT vendors from India to tap into this booming market which is on an upswing now."

Masood said that the offshore model is past the hype and is entering mainstream.

According to research carried out by Ovum, it was only during 2004 that TCS broke into the top 40 among IT vendors offering their services in the UK.

Talking about the competition Indian vendors face in that market, he said: "Indian companies are still small players and are up against giants such as IBM, Accenture and CapGemini who generate over £1 billion from UK market. However, these companies' growth rates are slowing down considerably as against 30 per cent plus growth rate which are being registered by Indian companies."

He added that the public sector has been the buoy for the UK IT market, clocking nearly 9.6 per cent compound annual growth rate from 2002, while the private sector's contribution is growing at 3.2 per cent.

Talking about the path Indian IT vendors should adopt, Masood said: "Indian firms should graduate from just support services to applications-led outsourcing. These companies are performing well and catching up but there is no room for complacency. Focus and differentiation is everything and just offshore is no longer a differentiator."

He added that the BPO market too is getting attractive and "we anticipate it to touch 7 billion pounds by 2008 from 4.5 billion pounds in 2004."