International Data Corporation (IDC) and Cyber Media India have ended their partnership in India. Cyber Media was carrying out research for IDC’s India practice for the important sectors of information and communications technology (ICT). Now, IDC is setting up a new research unit in Bangalore, to take care of India centric research.
Cyber Media would stop providing research on the Indian market to IDC, with effect from 28 February, 2011. Cyber Media’s strength lies in its established brands like Dataquest, PC quest and Voice and Data, and its reservoir of information in the emerging areas of outsourcing, entrepreneurship and biotechnology. Information and research activities in the ICT domain would continue to provide basic sources of revenue. Cyber Media’s quest would be to carve out its independent practice in this area, where it has the expertise, but without the brand of IDC.
The Indian market continues to be extremely attractive with its strongly growing economy. IDC said that it plans to step up its investment in the country to provide more comprehensive coverage. In a joint press release of both companies, they stated that total IT spending in India is expected to cross $41 billion over the next five years. The telecom market is expected to show a similar growth. Will there be enough room for both Cyber Media and IDC to operate in these markets is the question.
What is not very clear is how the business will be restructured. At present, Cyber Media owns a 100% stake in IDC India, which houses the research operations. It had a turnover of Rs 13 crore in 2009-10 which is about 13% of Cyber Media’s consolidated revenues of Rs 101 crore. If the entire business moves to IDC now, then Cyber Media’s turnover will fall to that extent. Will IDC compensate it for the loss in revenues? If it loses the revenues, how much time will Cyber Media take to compete in the market, and regain lost ground?
Investors in Cyber Media appear to think this a positive development for the stock, with the price rising by 4.8% to Rs 25, on a day when the markets were down by 2.4%.
Press release on the BSE.
Press release from IDC on its Indian research outfit.