Indian IT services industry :marketing strategies for growth in domestic market

Abstract

The Indian domestic market for IT services has been an enigma. On one hand market analysts claim that this is a very high growth segment for companies to focus on. Indeed in several other industries, eg. manufacturing, companies have initiated operations in India to serve the Indian market. On the other hand, the IT services companies in India (both Indian companies as well as US and European companies) do not seem to share the same enthusiasm of the market analysts. One obvious reason is that the Indian IT services companies started as an export-oriented industry. Also the US and European companies focused on executing projects for clients in other countries leveraging the cost advantages in India. However, as the industry matures, there are obviously going to be change in strategies and focus areas. The domestic market for IT services has also attained critical mass in the mean while to deserve more attention. This project investigates several aspects of attractiveness of the domestic market, from published reports as well as independent primary research, to construct a balanced view of this market. The objective of the investigation was to determine a marketing strategy to earn revenues from the domestic market without sacrificing profit goals. The study consisted of two parts: i. a detailed segmentation of the domestic market and the technology trends and growth opportunities in the key segments, ii. formulation of a marketing strategy to address this market. The marketing strategy is meant for IT services companies. However, there are wide variances in IT services companies in India in terms of competencies and business models. Therefore, we differentiated the strategy to indicate how different categories of IT services companies need to fine-tune the strategy. For the purpose of this study we looked at three categories of IT services companies: i. Large Indian IT services companies (annual revenues > $1Billion), ii. Large US/European IT services companies (annual revenues > $1 Billion), iii. Mid-sized Indian IT services companies (annual revenues < $1 Billion). Small and medium enterprises and boutique firma have not been considered in this study. The study shows that with a focus on the right market segments and with reasonable effort at building new organizational capabilities, all the three categories above can leverage opportunities in the domestic market.