India's Outsourcing Revenue Will Grow More Slowly

India's outsourcing revenue is likely to grow more slowly in the Indian fiscal year to March 31 as a result of the global economic downturn, according to a local trade body.

The country's export revenue is expected to reach about US$47 billion, after showing growth of 16 to 17 percent, the National Association of Software and Service Companies (Nasscom) said on Wednesday.

The export figure includes revenue from exports by India's IT and business process outsourcing (BPO) industries. A large number of the operations are Indian subsidiaries of multinational companies like IBM and Accenture, besides large Indian outsourcers like Tata Consultancy Services, Infosys Technologies, and Wipro.

In the previous fiscal year, revenue from exports grew 29 percent to $40.4 billion.

Indian outsourcers get a lot of their business from the financial services industry, which has been the most hit by the economic downturn, said Siddharth Pai, a partner at outsourcing consultancy firm Technology Partners International (TPI) in Houston.

Indian service providers also tend to focus on project work, which is more susceptible to customers' budget cuts, rather than on long-term contracts such as infrastructure management and application maintenance, he said.

Total outsourcing contract values worldwide dropped by 22 percent between the first half of last year and the second half, with the number of very large contracts particularly down, according to TPI's research.

Nasscom said in July last year that it was lowering the revenue growth forecast for the fiscal year to between 21 and 24 percent, both for the domestic and export market. It said it would review its forecast again after December in view of the worsening economic downturn.

Looking further ahead, the trade body said on Wednesday that despite an uncertain economic environment, the country's IT services and BPO industry will post export revenue of $60 billion to $62 billion for the fiscal year ending March 31, 2011.

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