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Unformatted text preview: stomers expect the spending to
increase significantly in 2014. Our channel checks suggest that corporates in
Asia and the USA are likely to be early adopters of these trends, with Asian
spending likely to rise 20–30% yoy in 2014. We find clients to be most bullish
about spending on revenue-enhancing streams, such as social, mobility and
analytics. Spending on cloud services continues to be muted, especially in the
financial services sector. Enhanced regulation and data security concerns are
the two key reasons for the muted demand for cloud services, in general, from
financial services customers. Page 10 Deutsche Bank AG/Hong Kong 7 January 2014
Software & Services
Indian IT Services Customers believe that, among the Indian vendors, Cognizant is best placed to
address the opportunity in SMAC. Infosys is a distant second. Tech Mahindra
also found a mention as a vendor with good capabilities. In general, Indian
vendors are perceived to be low on the maturity curve for providing these
services. Some of the key reasons are as follows.
Lack of ‘thought leadership’ or track record.
Few successful executions to demonstrate; buyers are not from
technology areas, and would prefer a ‘show and tell’ approach from
Undifferentiated service offerings.
Not enough ‘go-to-market’ with the SMAC ecosystem such as
Microsoft, Google, SFDC and AWS.
The lack of depth in services by larger vendors makes SMAC a strong growth
opportunity (like Y2K in the late 90s) for mid-tier Indian vendors. As highlighted
in our note Customer interactions suggest share gains for Indian vendors; TCS
best play dated 24 September 2013, tier II vendors are best suited for:
new application development, especially for “agile development
work for which innovation or co-creation is a key criterion;
engagements that need extensive access to and involvement of senior
management in mid-sized or small deals (USD10-20m); and
faster turnaround with ‘heavy hitters’ and subject matter/domain
Most large verticals contributing to growth
While any improvement in the western macroeconomic outlook will positively
impact demand from all verticals, we believe growth will be largely driven by a
pickup in spending in the financial services (25–43% of revenues) and
manufacturing (15–33% of revenues) verticals. Demand from the telecom
vertical (8–13% of revenues) is likely to remain muted.
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- Spring '14