Bangalore: Japan turns as right market for Indian IT services companies, who are looking for new destinations to counter the set back from the U.S. market.

Considering Japan as a major automobile and consumer electronic manufacturing destination in the world and as one of the most IT spending nations, Nasscom, an IT industry body is presently undertaking a study to evaluate the out sourcing opportunities in Japan.

"Revenue from Japan hardly contributes to three percent of our total software services exports. We believe that Europe and Japan offer huge potential for Indian vendors," Ameet Nivsarka, Vice President, Nasscom, told The Economic Times.

Some of the Indian companies have already attempted to enter the Japanese outsourcing market. For instance, India's second largest IT company, Infosys has signed a pact with Nihon Unisys to combine its global delivery model with the latter's strength in the Japanese market. Another IT major, Wipro has also tied up with some of the leading Japanese corporates including NEC. Around 3 percent of Wipro's IT revenue comes from Japan. Similarly, Infotech Enterprises, Patni Computer and KPIT Cummins have substantial presence in Japanese market.

An IT analyst opined that local talent and understanding of IT buying behavior of corporations in Japan are critical to make a foray into this market. Unlike the U.S. market, which has been more open to IT outsourcing, in Japan it takes a considerable period of time to build the relationship and get a contract.

According to a Japan market study by neoIT, an offshore advisory firm, the total IT services sector is estimated to be around $50 billion. Less than 2 percent of this market is offshored, with China getting the majority share.

S Sabyasachi, Senior Director, neoIT said "currently Japan's outsourcing requirement is for embedded software and solutions and a lot of low-end work (testing and coding). When it opens up for more complex solutions, Indian services majors will see a traction coming from this region."