NEW GEOGRAPHIES TO HELP IT FIRMS BEAT SLOWDOWN

Rupsa Ray, Mumbai
The Financial Express

A prudent business spread across geographies is expected to make Indian IT companies remain insular to the slowdown in the US. For instance, Mastek has more operations in the UK and believes it will not be much affected by the US slowdown. NetApp, a company into data management, has a wide spread across Europe, Middle East, Latin America and the US, while NIIT Technologies is present in Europe, US and the Asia Pacific. According to analysts, it’s companies dealing mainly in the banking and financial sectors that are going to be affected more, as also companies which are unable to diversify their portfolio and venture into newer geographies. And it’s not only the smaller companies but also the major players who will be faced with the crisis. “The slowdown will have some effect on the domestic industry. But this recession might also be helpful since there might be more outsourcing from the US to India,” commented Ashank Desai, founder, Mastek. “As it is, these days we see the emergence of newer geographies. Thus, Companies with diversified geographies are not going to be affected much. Mastek is not much worried about the slowdown as we are more operational in the UK,” he added.

Industry analysts believe that the slowdown might bring some kind of concern for India because 60 percent of the revenues of the export segment still comes from the US.

“The slowdown will bring some turmoil in the domestic market not only in the first and the second quarter of this fiscal, but there is a concern that it might continue for the rest of the year,” said an industry analyst. “However, companies which are unable to afford hedging or diversify their portfolio are the ones which will be facing problems,” he added.

But many industry insiders see this as an opportunity for the Indian IT industry in more ways than one. “The Indian Economy is robust and the US recession might create a short term problem for the industry, but it’s not going to affect the industry in a big way. Moreover, we should look at the brighter side, it might bring more business to India,” said Arvind Mehrotra, head-Asia Pacific & India, NIIT Technologies.

“The slowdown is a thing of concern but then it opens up opportunities to concentrate on other potential geographies,” said Soumitra Agarwal, marketing director, Network Appliance Systems Pvt Ltd.

“A good thing about this recession is that the Indian biggies will be able to make more acquisitions in the US, and strengthen the business,” commented the analyst.