In A Role Reversal, Outsiders Seen Dominating Indian IT Market

BANGALORE, India -- Indian IT-services companies may be dominating the global market for software services, but they risk losing out on the growing domestic market for such services if they don't refocus on their own backyard, a market researcher warned.

Gartner said in a report that "multiple forces are working in tandem to drive the Indian IT-services domestic market in a boom phase in 2004 and beyond. However, just as Indian players are trying to enter the local U.S. markets, global players are increasingly realizing the importance of India as an outsourcing destination and are setting up development centers."

Gartner said new players in the Indian market will not only use local delivery centers to service their offshore business but also target the local IT-services market here.

Indeed, IBM recently grabbed one of the largest IT-outsourcing services deals here, a contract worth about $750 million from wireless services provider Bharti. The deal caused consternation within the Indian IT industry.

Warning Indian IT players not to ignore their home turf, Gartner said the Indian market will grow by more than 17% on a compounded annual basis through 2008.

"India is expected to be the fastest growing IT-services market in the region as compared to the global average of 6%, making it faster than its Asian counterparts, including Singapore, China, and Australia," said Craig Baty, Gartner's group VP and chief of research.

This year is expected to mark the start of rapid growth for India's IT-services market. "Indian players have to gear up and demonstrate their capabilities," said Ravindra Datar, principal IT-services analyst for Gartner India.