Indian IT firms relook at their West Asia plans

The streets of Cairo may be quieter for the moment, but the fire of political change that is spreading to other regions of West Asia is likely to impact the long-term expansion plans the Indian information technology (IT) firms have for the region.

"A number of Indian IT companies that were looking at long-term investments in the region, as a second and third level investment zone, will have to now re-look plans," said Ameet Nivsarkar, vice-president for global trade and development, National Association of Software and Services Companies (Nasscom).

The fact that strife and political instability lead to a loss of investor confidence is a foregone conclusion, Neevsarkar said, stressing on the importance of democratically-elected governments in the region.

"Even if one were to discount immediate challenges, the bottom line remains that going forward, the industry would look at stability for inspiring investor confidence. This, despite the fact that countries like Egypt have a fairly well-educated talent pool," he said.

Indian IT companies were eyeing the West Asia-Africa region for long term expansion in the wake of mounting protectionism in the North-American market, which at present forms about 80 per cent of the industry's revenues.

"Indian vendors are actively developing the Asia Pacific region which had a growth rate of 10 per cent in the 2009-10 financial year. West Asia offers significant untapped potential, that the industry could leverage to broad base its client base and diversify from core markets," said a Nasscom strategic review report last year.

The trend was largely visible in actions by India's largest IT services provider, Tata Consultancy Services (TCS), which opened a centre in Casa Blanca, Morocco, to cater to the demands of France and the French-speaking population.

The company, while evaluating other centres for Africa was looking at the localisation of workforce.

The country's second largest IT service provider, Infosys, had announced it was looking at changing existing patterns of 65:25:10 per cent revenue generation from the US, UK and rest of the world, to a 40:40:20 pattern.

The IT bellwether has, at present, offices in Riyadh, Kingdom of Saudi Arabia and in Dubai and Sharjah, United Arab Emirates.

The company also has employees supporting client projects across countries in West Asia in addition to the region being a growth market for Infosys' core banking product-Finacle.

Terming the current situation in the region as a concern, Infosys, managing director and CEO, Kris Gopalakrishnan, said, "We continue to support our client's requirements from India. We will continue to monitor the situation and its impact on the global economy."

For Wipro Technologies, on the other hand, the situation at present warrants a concern keeping in mind employee safety, given the presence of its step subsidiary, Wipro Information Technology Egypt SAE.