INDIAN SOFTWARE SERVICES firms have started looking to emerging markets like the Middle East and Africa as the US economy continues to flounder.

The sub-prime mortgage crisis has been a blow to the entire economy, including the IT industry, and to avoid getting significantly effected by it, India’s export driven firms are now looking to the Indian market itself, as well as to Asia-Pacific, Latin America, the Middle East, Africa and Eastern Europe, where technology spending is booming.

According to research outfit Gartner, spending on information technology in emerging markets will likely reach $1.1 trillion this year, up from $964 billion in 2007. The Gartner report adds that by 2011, it estimates that this amount will have reached $1.3 trillion, with compounded annual growth of about 8.5 per cent, almost double the 4.3 per cent growth rate in mature Markets.

The Indian software and outsourcing industry itself is growing at a tremendous rate, with sales reaching $64 billion in 2007, up from $48.1 billion in 2006. The US currently makes up about 60 per cent of those sales, but a strengthening rupee and a US economy rushing headlong into recession doesn’t bode well for Indian companies like Satyam Computer Services, Infosys Technologies and Wipro, which is why they are looking elsewhere for business.

Satyam's Aggarwal, who heads the business in Asia Pacific, Africa, India and the Middle East noted, "Recent events in the US have only re-confirmed companies' belief in diversifying risk". He also told Reuters that his company was in the middle of negotiating several big deals (ranging from $10 million to $30 million) across Asia-Pacific, the Middle East and Africa.

Wipro is expanding into developing markets, announcing already this year that it would be taking on a $50 million, five-year outsourcing contract from an Indian retailer, and establishing a joint venture in Saudi Arabia worth $100 million, from Saudi Arabian Airlines. µ

L’Inq
Reuters