$2BN IT OPPORTUNITY WILL UNFOLD BY DEC

Amit Tripathi, Mumbai
DNA

The period from October to December 2008 is crucial for the Indian IT companies as deals worth $2 billion would be decided in these three months, industry experts said.

October-December constitutes fourth financial quarter for most multinationals in the US and Europe.

“We see $2 billon of projects coming for the Indian IT firms which will be decided in the next 90 days,” said HCL Technologies MD and CEO Vineet Nayar, said answering queries of industry analysts, while quoting the US-based outsourcing advisory firm TPI’s third quarter index for 2008.

Of the $2 billion worth of project deals, 45% of projects may come from manufacturing, 25% from media and entertainment and the rest from financial services, Nayar said.

Nayar said that usually 55% of deals are in competition with MNCs, while 45% of deal competition is mixed bag, where other Indian IT firms also compete. “So our fight is more global than local,” he said.

Third quarter is typically the weakest quarter in a year whereas fourth quarter the strongest. HCL Technologies, for instance, secured deals worth $310 million in Apr-Jun 2008, the second quarter for most Western firms, but could secure less orders worth $250 million in Jul-Sep 2008, the third quarter.

US advisory firm TPI’s Index for the Q3 of 2008 states that the previous three quarters were positively impacted by several large networking deals but the “industry did not see that trend continue in Q3 of 2008”. The research firm added that it “foresees mega-deal and mega-relationship activity increasing in Q4 of 08”.

V Balakrishnan, CFO of India’s second largest IT firm in terms of headcount, Infosys, however, said it was too early to comment on opportunity as this is the time when Western clients restructure their finances for their next financial year. “We are thus adopting a cautious approach in the current economic scenario,” said Balakrishnan.