Patni Computer joins big 5 in fight for domestic pie

[sukishan]

The country's sixth largest software exporter Patni Computer Systems has joined the likes of Tata Consultancy Services (TCS),

IBM in competing for a share of the lucrative domestic IT market.

Like many of its peers, Patni, which clocked revenues of $719 million (around Rs 3,500 crore) for 2008, has been hurt by the contraction in demand for IT services in the key markets of US and Europe.

The company has undergone an internal restructuring and has split its Asia-Pacific operations into two regions - Australia and Japan and SAARC - and moved Deepak Khosla, formerly head of Asia Pacific sales, to the role of president, SAARC region. "The company has restructured its operations with the objective of making India a separate region. This will bring further granularity because India requires dedicated focus and a different mindset," Mr Khosla told ET, confirming the company's move to enter the domestic market.

Patni is among the first mid-size software exporters to enter the domestic market. So far, the domestic market has seen two kinds of vendors - top IT companies and also the smaller ones which do not have a presence in the export market. Players like Patni have established quality benchmarks and a long track record but are at a discount to players like Infosys on parameters like pricing for the overseas markets signalling tougher competion for incumbents.

Many large government contracts involve an upfront investment by the vendors with returns being earned over a period of time as a percentage of the transaction fee. A case in point is that of the passport computerisation contract which was won by TCS.

"We see this (India) as the perfect place to deploy our cash unlike saturated markets. Today, government and PSUs constititute around 64% of IT spending in India and we believe some of the partnership models that are emerging require companies with deep pockets," said Mr Khosla. Patni has over $ 300 million (or Rs 1400 crore) cash on its books.

The company is learnt to be in negotiations for some large contracts in the domestic market although this could not be confirmed. According to Nasscom, the domestic opportunity in the BRIC (Brazil, Russia, India and China) countries will be anywhere between $380 and $420 billion by 2020. India is expected to contribute around a quarter of this.