Is seeing an improvement particularly in nmacs

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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 vendors. 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 methodologies”; 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 experts. 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. Gi...
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