New Delhi: Global IT giants like IBM, EDS, Accenture and Oracle are gearing up to take on the challenges posed by their Indian rivals.
A number of global research firms, including Goldman Sachs, Forrester, Gartner, AMR Research and Wachovia Securities have suggested in separate research reports that Indian IT majors are outpacing their rivals in the US as well as other low-cost counties like China.
While US tech services firms are likely to post an average operating profit growth of 7 per cent this year, the growth rate is pegged at 22 per cent for their Indian counterparts, Goldman Sachs said in a report.
The trend would continue through the next year as well with operating profit growth of US companies estimated a tad better at 9 per cent, as against the continued growth of 22 per cent in India, Goldman Sachs added.
The analysts at the US-based equity research major anticipate an average revenue growth of 30 per cent for the large-size Indian IT companies in 2006 and 2007, as against 8 per cent for their US rivals during the period under review.
The industry experts believe that the Indian IT companies, particularly those in the BPO space, have moved beyond being just low-cost service providers and are focusing more on efficiency and customer satisfaction.
Dana Stiffler of US-based AMR Research said in a recent report on Indian IT sector that the latest quarterly results of large India-based service providers show impressive performance across industries and all horizontal practice areas.
"Rafts of new clients came on board; existing client bases were very profitably mined, and thousands of new employees joined the firms," Stffler added.
Despite being late to the party, the US IT majors are finally responding to the continuing growth trend being enjoyed by their Indian rivals, believe the analysts.
A highly skilled and vast workforce, low-cost operations, a booming economy, good telecom links and a fast-growing market have already led to global giants like Microsoft, IBM and Intel announcing investments to the tune of over $15 billion (nearly Rs 70,000 crore) in India besides thousands of new jobs for their operations and joint ventures here.
About six major global IT companies -- German application software giant SAP AG, IT services major IBM, world's largest software maker Microsoft, largest computer chipmaker Intel, US-based software giant AMD and leader in networking for the internet Cisco -- have each committed over $1 billion investment in the country over the past few months.
But despite all such initiatives, it seems the global companies have a long way to go before they are at par with the Indian counterparts. In many ways, cost is no longer the main advantage for Indian outsourcers.
Instead, the best Indian firms have honed on efficiency and quality to provide software and service projects to customers worldwide.
The growing success in India has increased competition for talent, but the Indian firms are still hiring thousands of people each year, says Dana Stiffler of AMR Research.
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