Wednesday, November 14, 2007

Indian IT companies set to capture challenging Japanese market

FInally Japan is getting the attention it deserves in the minds of Indian IT companies. This article from Economic Times talks of the focus that most of our customers' are placing on this sector. Editor.

NEW DELHI: Japan is the new battle ground for Indian IT companies, who have earlier been focussed on the US and Europe. With its language and culture placing hurdles on the information super highway, the world’s second-largest IT products and services market has been a challenge for Indian companies. However, as the Japanese outsourcing market comes of age and the need for geographic diversification assumes even greater importance, Indian IT majors are out to tap the opportunity.

Recently, Wipro acquired the wireless design arm of Tokyo-based Oki Electric Industry to help it expand in Japan and East Asia. “The acquisition would help us understand how to better our processes in Japan, apart from positioning ourselves capable of high level, complex works,” said Wipro Japan and Asia-Pacific vice president Venkatesh Hulikal. While Wipro has been present in Japan for over a decade, the revenue from the market was around 3-4%. “

We are enhancing our presence in product engineering, enterprise applications and financial solutions and hiring more local people. With the Japanese manufacturers’ growing interest in Indian market, the IT firms will also gain as there is always a natural inclination to do design with manufacturing,” Mr Hulikal said.

The Japanese IT services market is estimated about $95.3 billion and is expected to grow about $107 billion next year. “Traditionally, Indian IT firms have not focussed on the Japan market. One reason is that the market is very different — significant language and cultural barriers, nascent outsourcing market and proximity to China,” said Patni’s Asia Pacific senior vice president Deepak Khosla. For Patni, currently about 4.5% of its revenue comes from Japan, and the company plans to increase it to 8-9% in the next three years.

For HCL Technologies, Japan is gaining strategic importance. Recently, when founder CEO Shiv Nadar assumed the position of chairman and chief strategy officer, he named Japan as a key focus area. For Infosys, Japan figures among its growth markets. The company has formed the New Growth Engines unit to expand business in Japan, Australia, China, Middle-East, Canada, South America and Latin America.

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