Study: Indian Software Firms Going Global Pose Threat To Established Players

Indian companies could potentially unseat such giants as EDS, Computer Sciences Corp., Capgemini, Unisys, Perot Systems, Accenture and BearingPoint, a study by Katzenbach Partners LLC (New York) concluded. "Infosys, Wipro, Satyam Computer Services and Tata Consultancy Services will have greater market incentives and capabilities to serve customers consistently and make good on promises during the critical third and fourth years of contracts," the study found. Indian firms are motivated to grow and maintain quality, and the marketplace has taken into account the quality of their operations and cash flow. The U.S. and European players are mainly seeking to build value by cutting costs, the firm said. “We believe the Indian companies will continue to invest in clients even three and four years into a contract, when half of all outsourcing deals normally would fall apart. We see a virtuous cycle with Indian outsourcing companies: Strong growth boosts valuation ratios, which, in turn, create reinforcing incentives to grow." Indian companies offer superior operating margins due to low cost of service, strong vertical market focus, high quality, reinvestment in innovation and strict conformance with global standards, the study found. Meanwhile, Indian companies are evolving into global players by developing international strategies that include recruitment in China and Russia. Major U.S. and European outsourcers must grow and improve profit margins or face mergers, consolidation and loss of market share, the study predicted.