Date:30/08/2005 URL: http://www.thehindubusinessline.com/2005/08/30/stories/2005083003040400.htm

Back Indian software vendors should not ignore domestic market: Gartner

Our Bureau

Mr John Roberts (left), Chief, Research, Gartner Asia Pacific, with Mr Partha Iyengar, Research Vice-President, Gartner India, at a press conference in Mumbai on Monday. — Paul Noronha

Mumbai , Aug 29

MULTINATIONAL vendors have cornered the bulk of the domestic Information & Communications Technology (ICT) market, and their market share of 58 per cent is expected to rise further, according to research firm Gartner.

It has warned that if Indian service providers continue to pursue the export market at the expense of the local market opportunity, it will have a detrimental long-term impact on the growth of the overall ICT export business.

"Why has Bharti Tele-Ventures' outsourcing deal gone to IBM?" asked Mr Partha Iyengar, Vice-President, Gartner Research, at a news conference here on Monday.

The domestic ICT industry has very limited choices when it comes to local vendors, he said. "This is because 60 per cent of Indian services vendors focus on the export market due to the lucrative margin, except for strategic engagements with government and MNCs."

Indian ICT spending will surpass $54.8 billion (by 2008) from $29.5 billion in 2004, representing a compounded annual growth rate of 19 per cent.

But buyers here are choosing strong multinational vendor brands that they would prefer to outsource high-end work too. "If Indian vendors have no standing in the local market and do not compete for these higher end (transformation oriented) deals domestically, it will hamper their prospects in pursuing similar deals in international markets," said Mr Iyengar.

Indian companies tend to buy from global IT providers due to the perceived quality and technological capability of their solutions. Locally developed products, for the most part, are used in tactical low risk projects though some exceptions in telecom and core banking solutions exist. But these are exceptions and few and far between, he said.

"Indian vendors to not believe that they can become the next Microsoft, SAP or Oracle, which shows a clear lack of management vision and mind-set to make long-term product based investments," said a statement from Gartner.

But this is expected to change as the domestic market will begin to emerge in the 2008-2010 period, if the overall economy continues with strong growth.

There could also be a serious dearth of talent going ahead, especially in the context of a possible future that replaces programming by automation, said Mr Iyengar: "There are not enough design architects, project managers. Frankly, we have not done enough. We are not into innovation so much as execution."