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IT outsourcers face cloud computing challenge

18 августа 2009

Cloud computing is threatening the business model of the Indian IT outsourcing industry as the global recession pushes business to cut costs, according to the chief executive of Infosys.

But Kris Gopalakrishnan, one of the leading figures in the Indian IT industry, also said he saw opportunities to expand Infosys’s customer base as cloud computing would allow it to tap into mid-sized companies.

Cloud computing allows software applications and data to reside on web servers rather than on users’ own computers. Mr Gopalakrishnan said: “The slowdown has forced companies to look at cloud computing seriously ... it is a change that is happening and if we are not adapting to that change we may get caught out.”

Moving its outsourcing applications to cloud computing would require a large investment by Infosys and other Indian companies. Mr Gopalakrishnan said Infosys, India’s second-biggest IT services exporter, was “testing the waters” with cloud computing as previous much-heralded technological changes had failed to happen as quickly as predicted: “The question is how much the market will move to the new form of computing.”

But he added that Infosys – and by extension other Indian IT outsourcing companies – needed to find a role for themselves if that change took place or risk being squeezed out by western competitors such as IBM, HP and Oracle. That role would be as an integrator, he added.

But the shift to cloud computing could also open growth opportunities for Infosys. Currently, Infosys focuses only on the world’s 1,000 leading companies, which have annual revenues of approximately $5bn or more. But cloud computing would allow it to tap the mid-market and “this could bring it down to $1bn-plus revenues”, said Mr Gopalakrishnan.

IT outsourcing has been one of India’s most successful industries. But it has been caught out by the economic crisis as well as increased competition from the likes of IBM.

Mr Gopalakrishnan said he was worried about protectionism in the US. Infosys receives 62 per cent of its business from the US and 35 per cent from financial services. The rise in protectionism underlined the wisdom of Infosys’s move to double the amount of work it does in emerging markets in the next three to five years, he said.

“We need to change. We want to bring down these dependencies and create a more balanced distribution of revenues,” he added.

Источник: Financial Times

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