India's Outsourcing Exports at US$50 Billion

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India's revenue from exports of IT and BPO (business process outsourcing) services is likely to grow 5.5 percent to US$49.7 billion in the Indian fiscal year to March 31, 2010, according to estimates released Thursday by the country's National Association of Software and Service Companies (Nasscom).

The revenue figure includes exports by Indian outsourcers as well as by Indian services and software development subsidiaries of multinational companies including Microsoft, Dell, and Oracle.

Nasscom has forecast higher revenue growth in the range of 13 to 15 percent from IT and BPO exports in the next fiscal year to March 31, 2011.

India has emerged as a key supplier of IT and BPO services to customers in the U.S., U.K., and other markets. Its business was however hit in the fiscal year to March 31, 2010 by the recession in some of these economies.

The growth rate of 5.5 percent estimated by Nasscom for the year ending March 31, 2010 is far lower than the 16 percent estimated by Nasscom for the previous year. The 2009 figure is still an estimate as the results of Satyam Computer Services, a large Indian outsourcer, are still being re-stated, after a financial scandal at the company.

Top Indian outsourcing companies like Tata Consultancy Services (TCS), Infosys Technologies, and Wipro said in January that they were seeing an improvement in demand for their services from customers in key markets, including the U.S.

Indian outsourcing companies have also started hiring in large numbers again. Wipro's IT services business added 4,855 staff in the quarter ended Dec. 31. The company had cut staff by 630 in its IT services business in the previous quarter. TCS said in January that it is adding about 11,000 staff in the current quarter, including 8,000 trainees. The company added 7,692 staff in the quarter to Dec. 31.

Direct employment by the country's IT industry is expected to be 2.3 million by March 31, 2010, with over 90,000 jobs added during the current fiscal year, Nasscom said.

A number of new large IT services deals are expected to be signed by the second quarter of this year, Sudin Apte, principal analyst at Forrester Research, said in January. Indian companies are however not likely to achieve soon the revenue growth levels they had before the recession, he added.

A lot of the expenditure by customers still falls under the category of necessary expenditure, with discretionary expenditure on IT services likely to start by the middle of this year, according to Diptarup Chakraborti, principal research analyst at Gartner.

Besides a pick up in exports revenue for the year ended March 31, 2010, Nasscom is also expecting a growth in the domestic services business. Domestic revenue is expected to grow by 12 percent to Indian rupees 662 billion ($14 billion). In the next fiscal year, revenue growth from the Indian market is expected to pick up by 15 to 17 percent.

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