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• Nominal exposure to Japan. Indian IT companies have about 1-2%
direct exposure to Japan, which we believe is too meager to impact
financial performance. There might be an additional 1-2% indirect
exposure, but again, we do not think that there will be worrying impact.
Moreover, companies have business continuity and disaster recovery
plans in place to deal with such disruptions in business. Some of the IT
companies including Infosys have already suggested that their
operations have not been perceptibly affected.
• Wipro is relatively more exposed though only slightly. On a relative
basis, Wipro gets about 1.5% of its total IT-Services revenues from
Japan. TCS has less than 1% exposure, while other large IT vendors also
peg their Japan exposure at ~1% of overall revenues
• Japan is characterized by R&D outsourcing and less of traditional
IT outsourcing. Indian companies predominantly serve the R&D needs
of their Japanese clients and less of their IT needs. IT operations in Japan
are relatively localized, controlled by either local IT vendors (Hitachi,
NTT) or captive IT arms of Japanese clients. R&D is more offshorecentric
than traditional IT and therefore, should see minimal near-term
risk from overseas disruptions.
• In our view, whether exposure to Japan will hurt Indian IT will
depend on how their Japanese clients are impacted in the course of
time. It is too early to render such conclusions but we believe that
even in the worst case, less than 1% of Indian IT revenues are at
risk.
Number of employees in Japan before the earthquake
Wipro 400
Infosys 250-400
TCS 100
Mahindra Satyam 100
Source: Indian Express, Business Standard
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
• Nominal exposure to Japan. Indian IT companies have about 1-2%
direct exposure to Japan, which we believe is too meager to impact
financial performance. There might be an additional 1-2% indirect
exposure, but again, we do not think that there will be worrying impact.
Moreover, companies have business continuity and disaster recovery
plans in place to deal with such disruptions in business. Some of the IT
companies including Infosys have already suggested that their
operations have not been perceptibly affected.
• Wipro is relatively more exposed though only slightly. On a relative
basis, Wipro gets about 1.5% of its total IT-Services revenues from
Japan. TCS has less than 1% exposure, while other large IT vendors also
peg their Japan exposure at ~1% of overall revenues
• Japan is characterized by R&D outsourcing and less of traditional
IT outsourcing. Indian companies predominantly serve the R&D needs
of their Japanese clients and less of their IT needs. IT operations in Japan
are relatively localized, controlled by either local IT vendors (Hitachi,
NTT) or captive IT arms of Japanese clients. R&D is more offshorecentric
than traditional IT and therefore, should see minimal near-term
risk from overseas disruptions.
• In our view, whether exposure to Japan will hurt Indian IT will
depend on how their Japanese clients are impacted in the course of
time. It is too early to render such conclusions but we believe that
even in the worst case, less than 1% of Indian IT revenues are at
risk.
Number of employees in Japan before the earthquake
Wipro 400
Infosys 250-400
TCS 100
Mahindra Satyam 100
Source: Indian Express, Business Standard
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