Small Indian IT Firms To Shift Focus From US Market

With the financial crisis hitting the US economy badly, the Middle East is emerging as a key market for the small and medium enterprises (SMEs) of India’s IT sector as they seek to reduce their dependence on the US market.

“The US accounts for almost 76 percent of India’s total IT exports, but with the slowdown in the US economy, it is very important that we look at alternatives to the US market to diversify the basket,” said Sunil Vachani, vice-chairman of the Electronics and Computer Software Export Promotion Council (ESC) of India.

Stating that the current global financial crisis is going to hit India’s IT exports, Vachani said ESC was trying to reduce dependence on the US market.

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“Indian companies have to be proactive and diversify to other countries and reduce their dependence on the US market so that they are not badly affected (by the economic crisis),” he said.

“That is why we are looking at the Middle East as one of the major markets.”

Apart from the Middle East, Europe, South America, Japan and Southeast Asia are now the focus markets of the ESC, he added.

Over 2,300 SMEs in the IT sector are members of the ESC.

Of India’s total IT exports of $46 billion in 2007-08 – around $43 billion in software and over $3 billion in hardware – the Middle East accounted for $1 billion, an increase of 17 percent from the previous year.

“Of this $1 billion, software exports accounted for $600 million while hardware’s share was about $400 million,” the ESC vice-chairman said.

Electronic hardware comprises IT hardware, consumer electronics and electronic components.

“In the Middle East, we are now looking at a growth of 25 percent,” he said, adding, “At Gitex, we want to showcase that there is a huge strength in India’s small and medium IT companies also.”

Compared to the share of IT biggies in India like Infosys, Wipro, Satyam and Tata Consultancy Services, SMEs have also emerged as significant players when it came to exports.

“Of India’s total IT exports (in 2007-08), SMEs accounted for 40 percent of the total electronic hardware exports and for software, the figure is 30 percent,” Vachani said. (Aroonim Bhuyan/ IANS)