Wednesday, July 25, 2007
Indian Outsourcing Companies Beaten by Rupee, and in Home Market
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Indian Outsourcing Beaten by Rupee, and in Its Home Market
By Andy Mukherjee, Bloomberg, Jul 19, 2007
Indian software companies, which compete furiously with each other for global outsourcing deals, are now facing a common enemy in the rising rupee. A strengthening home currency is reducing the rupee value of their dollar revenue and earnings.
Although the day-to-day volatility in the exchange rate has abated since the end of April, the challenge of long-term competitiveness remains for Indian exporters.
Partha Iyengar, vice president at research firm Gartner Inc. in India, has a blueprint that Indian companies can use to mitigate cost pressures. According to him, "Their first task should be to walk away from simple code- writing and testing -- the ``$10-an-hour'' work...Replacing low-end tasks with better-paying work is an obvious route to boosting revenue per employee."
The best place to build those muscles, according to Iyengar, is in the domestic Indian market, in which local Indian software giants have shown little interest, but where the global giants have surprisingly won most of the major contracts: March 2004: IBM won a $750 million order from Bharti Tele-Ventures Ltd.; Around the same time, Accenture won a $ 150 million order from Dabur India Ltd., a local maker of shampoos and beverages. A 10-year, $150 million order from Bank of India, went to Hewlett-Packard. To stake a credible claim for, say, a $2 billion global outsourcing order, Indian companies must first show their ability to execute large projects at home, says Iyengar. And when India happens to be one of the fastest growing markets, it makes sense to focus on getting deals from Indian companies. Some of the growth industries that IT sector should focus on are: retail, transportation, hospitality, banking, insurance and telecommunications - with telecom and retail being real high-potential growth sectors for the next 5-10 years.
Read the full report from here @ Bloomberg
Click on the labels below for more posts on those categories
See also outsourcing updates for related categories: India, IT, Telecom, Retail
Indian Outsourcing Beaten by Rupee, and in Its Home Market
By Andy Mukherjee, Bloomberg, Jul 19, 2007
Indian software companies, which compete furiously with each other for global outsourcing deals, are now facing a common enemy in the rising rupee. A strengthening home currency is reducing the rupee value of their dollar revenue and earnings.
Although the day-to-day volatility in the exchange rate has abated since the end of April, the challenge of long-term competitiveness remains for Indian exporters.
Partha Iyengar, vice president at research firm Gartner Inc. in India, has a blueprint that Indian companies can use to mitigate cost pressures. According to him, "Their first task should be to walk away from simple code- writing and testing -- the ``$10-an-hour'' work...Replacing low-end tasks with better-paying work is an obvious route to boosting revenue per employee."
The best place to build those muscles, according to Iyengar, is in the domestic Indian market, in which local Indian software giants have shown little interest, but where the global giants have surprisingly won most of the major contracts: March 2004: IBM won a $750 million order from Bharti Tele-Ventures Ltd.; Around the same time, Accenture won a $ 150 million order from Dabur India Ltd., a local maker of shampoos and beverages. A 10-year, $150 million order from Bank of India, went to Hewlett-Packard. To stake a credible claim for, say, a $2 billion global outsourcing order, Indian companies must first show their ability to execute large projects at home, says Iyengar. And when India happens to be one of the fastest growing markets, it makes sense to focus on getting deals from Indian companies. Some of the growth industries that IT sector should focus on are: retail, transportation, hospitality, banking, insurance and telecommunications - with telecom and retail being real high-potential growth sectors for the next 5-10 years.
Read the full report from here @ Bloomberg
Click on the labels below for more posts on those categories
Labels: competitive-advantage, india, it, it-retail, it-telecom, opinions, retail-india, telecom-india, trends, trends-india
PermaLink - Indian Outsourcing Companies Beaten by Rupee, and in Home Market posted by Ecacofonix : 8:41 AM
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