IT firms get domestic boost

Domestic businesses of Indian IT companies appear to have got a shot in the armwith the Modi Government’s focus on technology and its steps to reduce the digital divide.

For the first time in several quarters, the India-focused units of Tata Consultancy Services, Wipro and Zensar Technologies have grown by 4-25 per cent sequentially in the three months ended September 30.

The jump in domestic business could be attributed to the overall buoyancy in the market coupled with the Centre’s push on delivering effective governance through technology.

“If you look at India in particular, I am very happy to state that it has performed well this quarter, on the base of positive growth last quarter. The deal pipeline in India is also looking good. We are seeing spending, and we are seeing a lot of strategic programmes being initiated,” N Chandrasekaran, Chief Executive Officer and Managing Director of TCS, recently said in a conference call with analysts.

TCS recorded a 9 per cent rise in Q2 revenue from India.

The India business for most IT companies had taken a major hit last year, as Government IT spending had slowed down ahead of the 2014 General elections. However, the tide seems to have turned with the new government initiating new automation initiatives. Prime Minister Narendra Modi’s focus on ‘Digital India’, ‘Make in India’ and ‘100 smart cities’ also appear to have added to the optimism.

Speaking to BusinessLine, Ganesh Natarajan, CEO of Zensar Technologies, said : “I am very bullish on the India market because of the general sentiment at present, all of which is having a positive effect on private-sector IT spends. The whole management of e-governance deals is becoming very professional, as streamlining of government processes is happening in a big way.’’

Zensar recorded a 25 per cent rise in sequential revenue from India, albeit on a small base in Q2. Its larger peer Wipro has also seen an uptick in revenue from India based-customers.

Going forward, there is a strong probability of companies wanting to increase their exposure to the India market, say analysts.

A case in point is Bangalore-based Mindtree, which had scaled down its interests in the domestic market over the last two to three years.

An official said the company had stopped hunting for work on a voluntary basis, and had instead chosen to focus on servicing global clients in India.

“We see a need to re-evaluate this strategy in the next 6-12 months, given the way in which the Government is articulating its priorities with regards to digital India and reducing the digital divide,” said KK Natarajan, Chief Executive Officer and Managing Director of Mindtree.