Indian IT Giants Outpace Global Counterparts in Profit Growth

Strategic Insights -

The Indian IT sector has been outpacing its global counterparts in terms of profit growth, with analysts predicting an average operating profit growth of 22% for the year, compared to 7% for US-based tech services firms, according to a report by Goldman Sachs. This trend is expected to continue into the next year, with Indian IT companies anticipating an average revenue growth of 30% in 2006 and 2007, surpassing their US rivals' 8% growth. The Indian IT sector has moved beyond being just low-cost service providers, focusing on efficiency and customer satisfaction, with companies like IBM, EDS, Accenture, and Oracle gearing up to take on the challenges posed by their Indian rivals.

Key Takeaways:

  • Indian IT companies are expected to post an average operating profit growth of 22% in 2005, compared to 7% for US-based tech services firms, according to Goldman Sachs.
  • The trend is expected to continue into 2006 and 2007, with Indian IT companies anticipating an average revenue growth of 30% during this period, surpassing US rivals' 8% growth.
  • Indian IT companies have moved beyond being just low-cost service providers, focusing on efficiency and customer satisfaction.
  • Dana Stiffler of US-based AMR Research noted that the latest quarterly results of large India-based service providers show impressive performance across industries and horizontal practice areas.
  • Global research firms, including Goldman Sachs, Forrester, Gartner, AMR Research, and Wachovia Securities, have suggested that Indian IT majors are outpacing their rivals in the US and other low-cost countries like China.
  • US tech services firms are likely to post an average operating profit growth of 9% in 2006 and 2007, compared to the continued growth of 22% in India.

Statistics:

  • 22%: Average operating profit growth for Indian IT companies in 2005, according to Goldman Sachs.
  • 7%: Average operating profit growth for US-based tech services firms in 2005, according to Goldman Sachs.
  • 30%: Average revenue growth for large-size Indian IT companies in 2006 and 2007, according to Goldman Sachs.
  • 8%: Average revenue growth for US-based tech services firms in 2006 and 2007, according to Goldman Sachs.
  • 9%: Average operating profit growth for US-based tech services firms in 2006 and 2007, according to Goldman Sachs.

Sources:

  • Goldman Sachs report
  • Dana Stiffler, US-based AMR Research report
  • PTI news agency