The tremors of the US economy are now being felt in back offices in India where outsourcing has certainly lost its sheen and that is why aggressive players like Wipro are now clicking on products to salvage depleting margins. Wipro is all set foray into products business by expanding its R&D arm, which will include conceptualising, designing, prototyping and even manufacturing.
The product business launch is expected in next 6 months and Wipro is already in talks with local manufacturers in Taiwan, Korea and India for manufacturing tie-ups on a revenue share basis. The pilot projects are already underway in Wipro''s Bangalore labs.
Infosys and TCS on their part are looking to build a stronger product portfolio. TCS, for instance, is looking to develop platform based BPO and Infosys looking to strengthening its core Internet Banking Software - Finacle through acquisitions. The race amongst the Indian IT companies to establish presence in the product space is quite understandable given the current margins in 30 per cent bracket is on its way down.
Globally the margins for IT services are between 10-12 per cent but the product companies clock between 25 and 35 per cent. But the products also come at a huge cost, significant R&D investments have to be made upfront and the revenues will only kick in 2 to 3 years horizon.
The product business launch is expected in next 6 months and Wipro is already in talks with local manufacturers in Taiwan, Korea and India for manufacturing tie-ups on a revenue share basis. The pilot projects are already underway in Wipro''s Bangalore labs.
Infosys and TCS on their part are looking to build a stronger product portfolio. TCS, for instance, is looking to develop platform based BPO and Infosys looking to strengthening its core Internet Banking Software - Finacle through acquisitions. The race amongst the Indian IT companies to establish presence in the product space is quite understandable given the current margins in 30 per cent bracket is on its way down.
Globally the margins for IT services are between 10-12 per cent but the product companies clock between 25 and 35 per cent. But the products also come at a huge cost, significant R&D investments have to be made upfront and the revenues will only kick in 2 to 3 years horizon.
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