Date:07/08/2008 URL: http://www.thehindubusinessline.com/2008/08/07/stories/2008080751330400.htm

Back IT’s good going in retail, manufacturing

K. Bharat Kumar

Chennai, Aug. 6

Despite sporadic customer walk-outs or price renegotiation requests, especially in the financial services industry, things have not been bad for the Indian IT services industry.

This is encouraging news in the context the US’ troubles with high inflation, high fuel costs, job losses, huge write-offs for finance companies in the mortgage business and the like.

Growth in revenues from the US is continuing, even if at a less-than-delightful pace, particularly with players in the retail and manufacturing segments showing interest in IT outsourcing.

Satyam Computer Services saw significant growth in the retail sector (clubbed with transportation and logistics). The company attributes this to the need for the US economy to increase efficiency in a tough environment.

According to Satyam Chairman, Mr B. Ramalinga Raju, “High fuel costs and rising inflation… impact the prospects of such sectors… where there is a greater need for higher operational efficiency in the near-term. This… provides a fertile ground for transformational opportunities.”

Other areas looking up

While the automotive segment in the US is facing turbulence due to intense domestic competition, other parts of the manufacturing spectrum, such as defence and aerospace, are looking up for the company, according to Mr Ram Mynampati, board member and President, Satyam.

Of Infosys’ 49 new clients in the June quarter, 20 came from the manufacturing segment.

The company is seeing interest from customers particularly in sectors such as manufacturing and energy & utilities and also in areas such as mining, said Mr S. Gopalakrishnan, CEO, during a conference call with analysts in early July.

Wipro too seems happy with its performance on the retail front. Its Chairman, Mr Azim H. Premji, has said, “Early investments in India and Middle East emerging markets continue to pay rich dividends with another quarter of 50 per cent plus growth year-on-year.”

In the telecom space, telecom equipment vendors still see challenging times ahead while services providers are doing better.

According to Mr Sudip Nandy, R&D budgets are frozen for now in the equipment vendor space.

Good growth in Europe

Europe has seen good growth for most companies. Especially in the case of Cognizant, (which is not listed in the Indian stock exchanges, but has a large part of its software development base in the country) the company was in the news recently as it saw contribution from Europe go past 20 per cent of total revenues for the first time.

Infosys saw a slump in absolute revenues from Europe, possibly due to its biggest client, (a European telecom services provider, widely believed to be British Telecom ) having yielded lesser revenue in the June quarter (Rs 383.47 cr) compared to the March quarter (Rs 467.83 cr).