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IT’s ready to reap nuclear dividends

Posted by Manish Agrawal on Monday, 15 September, 2008

The impending official entry of the country into the Nuclear Club has thrown the door open for India Inc towards innumerable business opportunities potentially running into billions of dollars, particularly so for the technology services industry.

The Indian IT services industry, with its major markets being the US and Europe, hitherto had the defence and nuclear power generation sector in these regions closed for any kind of outsourcing or business opportunities. Now, with the signing of the nuclear deal, Indian IT industry has the potential to tap into these sectors offering various services like software, engineering, R&D and infrastructure management.

According to Frost & Sullivan ICT practice deputy director Kaustubh Dhavse, there will be immense business opportunities and Indian IT industry will get more RPFs and pitch for projects, which were not in the jurisdiction earlier.

The US defence industry is especially very lucrative with their IT budgets running into billion of dollars. As things stand today, this industry can only outsource its IT requirement to only two countries —Israel and Canada.

Browne & Mohan managing partner Dr T R Madan Mohan feels that this outsourcing potential would not be limited to just software services alone as there is the potential for hardware, electronics and semiconductor-related processes.

The Indian IT industry has been working with the aviation majors like Boeing and Airbus in their civilian projects providing certain CAD/CAM and basic IT services. Now, the potential has opened up for defence-related projects.

However, as things stand today, it could be a good two years, before anything translates into actual business. Harit Shah of Angel Broking says, “the trickle-down effect is at least two years away. The offset opportunities in the aerospace and aviation domain remains.” According to neoIT, an offshore advisory firm, senior director S Sabyasachi, there could be outsourcing opportunities for Indian companies from the government business in the US. Currently, the US states and city corporations, which have huge IT spends, outsource work only to local vendors. The total IT spending in the US government vertical is estimated to be in the region of $100-$150 billion, of which 20% is outsourced.

Industry trackers say many companies, such as Infotech and Satyam, are looking at the fast-growing engineering services market in a big way. An opportunity that is pegged at $40 billion by 2020, engineering services cuts across all these domains and defence and aerospace is part of this vertical.  Source: Economictimes.com

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