IT companies need to take more risk, say experts

If Indian IT companies want to step up their growth over 25 per cent, they need to change their tack and take more risk, say experts.

Giving an analogy of the Japanese automotive industry where leading automotive manufacturers like Toyota and Hyundai set up production facilities in America and other markets including India to retain their leadership position, Sidharth Pai, Partner, TPI Inc said, "Indian IT companies need to do the same. The potential is there, but to grow to the next level, they need to take more risks."

The strategy to be adopted is, "to create on-shore facilities to take over the entire IT department of potential clients or lower their profitability on larger deals and maintain the cost advantage, as the delivery model for MNCs and tier I companies is the same."

Another feather in the industry's cap is the increasing confidence of IT sector as they are showing a deeper account penetration across their key clients. This can also be guaged from the fact that the offshoring component in deals is growing "from 15-16 per cent in 2003 to 40 per cent last year and 50 per cent currently," Pai pointed out.

However, "the landmark is to get an assured revenue component of 50 per cent or more at the start of the financial year," Pai stressed.