Partha Iyengar, Vice President, Distinguished Analyst, Regional Research Director at Gartner
Infosys results show an underlying strength in the offshore paradigm, regardless of the naysayers. Profitability growth of 33% is obviously driven by more than just a 8% currency drop. The head-winds of the severe EU issues are undoubtedly there, but, similar to the 2009 recession, this is going to be a test of the Indian companies willingness to aggressively position themselves as part of the solution from the perspective of lowering the cost of IT for enterprises in the Euro zone, as opposed to being a part of the problem and being a part of the ‘cut backs’.
Management vision and willingness to be aggressive in the face of economic uncertainty – versus continuing with a conservative ‘hunker down in the bunkers’ approach – will, again, be the differentiating factor for the offshore centric providers. Also, it is incorrect to focus on overall budget growth and correlate it with the growth prospects of the offshore centric providers. The more important statistic is ‘replacement spending’, which is companies replacing ‘traditional local IT Services spending’ with ‘offshore spending’, in a continued attempt to bring down the cost of IT. This has been the main driver of differentiated growth in the offshore services space, and will continue to be so for the next 3 years or so.
Sourced From: Corporate Voice | Weber Shandwick
