Our analysis of the roles that Indian and Chinese companies will play in the evolution of the global IT Services industry was highlighted in a blog post by Marty Wolf that was published last week in VCCircle, a leading investment publication based in Mumbai.
In our view, IT Services will segment generally into two categories: cost-sensitive outsourcing services and higher value, strategic services. Indian companies have historically had the advantage of better, less expensive, faster services than most of the world. This triple threat catapulted India's IT Services industry into the global leader.
But between now and 2015, the Chinese government is actively investing more than $150 billion in 25 cloud computing centers by 2015 to shore up China's relatively immature cloud computing infrastructure.
Does this mean that Chinese companies are overtaking Indian companies? In a word, "no."
But, it does indicate that some more mundane or rote, cost-sensitive services might migrate to Chinese companies. Why? It's simple: they are now the ones offering low-cost services.
Indian IT Services companies are well trusted by their clients. This is a huge market advantage if Indian IT companies can move quickly up the value chain and achieve global scale before Chinese companies.
In the meantime, if Indian IT companies do nothing they risk continuing to experience declines in enterprise value despite increasing revenues.
Higher value services is one aspect of achieving higher valuations for India's IT industry. Now is the time for it to move on to the next chapter - delivering compelling financial returns.
To read the entire blog post, click here.