IT firms eye West Asia in derisking move

The Indian software companies' desire to derisk their businesses by relying less on the North American market has pushed them newer territories. Of these, West Asia appears to be the most promising market as it is expected to have a 100 per cent revenue growth.

At present, West Asia accounts for less than five per cent of the overall exports from the Indian IT industry, but by 2010 it could account for 8-10 per cent of the projected worth"" $50 billion, said Pradeep Udhas, executive director, KPMG India.

Satyam has classified India, West Asia and China as its fastest growing markets.

In tandem with the strategy, the company has established a development center in the UAE with 100 people and a sales office each in Bahrain, Qatar and UAE.

"The region accounts for two per cent of our total revenues and 24 per cent of our Asia-Pacific (APAC) revenues, just three per cent less than Australia, which contributes to 27 per cent of our APAC revenues," said Virendra Agarwal, director, (Asia Pacific, Middle East and Africa), Satyam. America followed by Europe, Australia and Japan are the biggest overseas market for Satyam.

"We are growing 7.5 times faster in West Asia than our average growth rate. We will expand our focus here and are in the process of registering a company in Saudi Arabia," he added.

IT major Infosys Technologies is not bullish about servicing the upcoming market, but it did make inroads in west Asia and other high growth areas through its product Finnacle.

"We have broadly classified two core focus regions Asia Pacific which includes India, south east Asia and Australia and EMEA, which is Europe, west Asia and Africa. Within these we have identified south east Asia, west Asia, Russia, central and western Europe and Latin America as high growth markets," said Merwin Fernandes, business head, Finnacle.

The small and medium players too are getting a firm grip on the business pie in the region.

Establishing its presence in the Middle East less than 18 months ago, Ramesh Mengawade, managing director of the $13 million Opus Software Solutions Pvt Ltd, is optimist about the high potential the new markets.

"We started our operations in the Middle East less than 18 months ago and now it accounts for 17-18 per cent of our total revenues." Opus is now planning to foray into China and Taiwan, apart from the US, which accounts for 54 per cent of the company's revenues.

"We see great market potential in China, Taiwan and the Middle East," says Mengawade.

Saurabh Kaushal, program manager, ICT Practice at consulting firm Frost & Sullivan said, "West Asia, south east Asian countries, Latin American countries (mainly Brazil, Mexico and Argentina), South Africa, and Hong Kong are the upcoming growth areas."

Elaborating on the Indian IT industry's growing acceptance in the region, Udhas said "The region was traditionally serviced by companies from Europe. But with companies such as Satyam making inroads, it will only be a matter time before they too will outsource to India."