Japan's $200 billion IT services market is now offering renewed hope for Indian companies as the country tries to jumpstart its economy and as more Japanese firms look to expand globally.
The road to rec
overy, coming after the tsunami crisis of 2011 which crippled the country, could potentially see an increase in IT spend, including outbound investments where Indian companies stand a good chance because of their global presence, say industry experts.
The Asian powerhouse is the world's second largest IT services market after the US but the top Indian IT exporters earn less than 2% of their revenues from the country, thanks to an insular market structure dominated by domestic conglomerates and cultural and language hurdles.
Now, when Japan's government has embarked on a 'three-arrowed economic booster plan' to kickstart growth and drive investment in a economy that has been stagnant for years, many Indian IT companies also seem to be on a better footing in the market, having expanded their presence with local partnerships after more than a decade of setting up operations there.
While both the outsourcing and offshoring models are gaining momentum, Japanese companies have also been leveraging the IT industry in India with the likes of NTT, Hitachi and NEC having acquired local IT firms, according to industry trade body Nasscom.
“Culturally and geographically, Japanese companies have been closer to China and have historically invested more in China vis-a-vis India. However, the need for Japanese companies to de-risk their country strategy combined with geopolitical and IP concerns are indicating a move towards considering India as an option,” said Ameet Nivsarkar, vice-president, Global Trade Development, Nasscom, adding that an estimated 900 Japanese companies across all sectors have operations in India now.
TCS, India's largest IT services exporter which last year entered into a joint venture with Mitsubishi Corporation, agrees that global expansion by Japanese firms is creating opportunities for it, in addition to the company's push into the local market. “The Mitsubishi relationship has helped us explore new business opportunities in Japan. From a brand perspective, TCS has gained huge exposure and leverage,” said a TCS spokesperson in a mail. “We’re expanding our footprint in Japan with plans for new offices in key locations,