Reuters Summit-Indian outsourcing firms eye emerging markets

25 November 2008:

BANGALORE, Nov 25 (Reuters) - Outsourcers, who get a large portion of their revenue from the hard-hit United States, are planning either to enter the Middle East market or expand there to reduce their dependence on the U.S. market.

Wipro, which counts India and Middle East as its fastest growing markets, said the Middle East will continue to see higher growth than developed economies.

"You can't not be in an emerging economy and still be a large player in 2015 or 2020," Wipro Chief Financial Officer Suresh Senapaty said at the Reuters India Investment Summit.

However, he added that given the current economic turmoil, expecting a double-digit growth from the Middle East would be a stretch.

Genpact Ltd also plans to cash in on the growth in the Middle East. The company said it has started bidding for a "little bit of business" in the Middle East market and expects to begin operations over the next three to four months.
"We are just finalizing our plans in the Middle East. There is a lot of money there and I think there is a lot of appetite for this kind of work," Genpact Chief Executive Pramod Bhasin said at the summit.

The size of the Middle East business will be "tiny initially" and the addition to revenue will be small during the first year of operations, Bhasin, who established Genpact in 1997, said.

However, Avinash Vashistha, chief executive of outsourcing consultancy Tholons, said although the Middle East is an attractive destination for outsourcing companies amid an infrastructure boom, its shine has been significantly reduced by the global market meltdown.

"I don't see them focusing heavily on the Middle East as they were planning to do before," he said.
Cheaper wages in India have helped attract outsourcing from Western firms such as Citigroup, Goldman Sachs and Airbus.
However, the economic slowdown in the United States, which accounts for more than half of the outsourcing sector's export revenue, has hindered its scorching pace of growth.

Genpact and Wipro have seen their shares drop significantly this year amid concerns that a U.S. recession will slash demand for information technology services, especially from the battered financial sector -- a key market.