Indian IT services firms have already captured around 6-7% of the market, largely across major technology spenders such as governments, banking and financial services, retail, mining etc offering e-government solutions, integrated infrastructure, platforms, security etc.
Slowdown in the IT industry’s biggest markets of the US and Europe is making firms explore untapped regions. Top IT firms TCS and Infosys last week announced significant deals in the African continent, with market research firm IDC predicting technology spending in the Middle East-Africa market to reach $30 billion by 2027.
Indian IT services firms have already captured around 6-7% of the market, largely across major technology spenders such as governments, banking and financial services, retail, mining etc, offering e-government solutions, integrated infrastructure, platforms, security etc.
“As Indian IT companies experience a short-term growth slowdown in the mature markets of the US and Europe, they are increasingly exploring opportunities to expand into other regions," said Dharmender Kapoor, chief executive of MINDSPRINT’s “The African continent currently holds a relatively small share, contributing less than 5% to the global IT outsourcing market,” he added.
MINDSPRINT’s , formerly the technology division of Olam Group, a $40-billion agri-business firm with a significant presence in Africa, is now providing IT services to external clients in the US, Europe, and various other markets.
TCS expanded its partnership with the Johannesburg-based Standard Bank Group to standardise its custody and securities settlement operations in over 15 markets and run all its critical operations on cloud by 2026.
The financial institution operates the largest custody network in sub-Saharan Africa with $635 billion in assets under custody and administration.
Similarly, Guaranty Trust Bank last week chose Infosys’ Finacle digital banking suite for its digital banking in 11 markets in Africa including home country Nigeria.
IT research firm IDC forecasts the Middle East and Africa (MEA) market will grow at a compound annual growth rate of 5.9% over the 2023–2027 period, reaching $38.1 billion in 2027. It expects managed services and project-oriented services will be the fastest-growing market segments in 2023, followed by support and business services.
Kapoor emphasized that the next two quarters will be “pivotal” for IT businesses, with technology spending and budgets expected to increase starting in January. “But cost-cutting strategies (that are part of non-discretionary spends) will persist as clients seek to reinvest the savings into digital services, solutions as well as AI/ML initiatives,” Kapoor, former CEO of midcap IT firm Birlasoft, added.
The Africa market is accounted for under the “rest of the world” geography for IT companies. The US and Europe account for 65-75% of the revenue of a typical Indian IT exporter.
IT market intelligence firm UnearthInsight said the rest of the world contributes around 8-10% of the revenues for Indian IT services firms which includes Australia, New Zealand, Africa (largely South Africa, Egypt, Nigeria, Kenya and Ghana), Middle East, Southeast Asia.
“Indian IT services firms are looking at newer avenues apart from US and Europe markets as these are facing macroeconomic challenges. The African IT Services market is estimated to be $18-22 billion largely penetrated by global IT services peers,” said Gaurav Vasu, founder at UnearthInsight.
This comes as Indian IT is experiencing one of the slowest growth phases with tier-I firms such as TCS, Infosys and HCLTech flagging receding demand in the short term. This is due to spending cuts by clients and unplanned project rampdowns. TCS will kick off second quarter results next Wednesday.