Bangalore: Following the economic slowdown every industry has suffered, for Indian outsourcing firms particularly it has meant lower pays and more competition. For Indian engineers with two to five years of experience, the past 12 months actually saw them lose nearly seven percent of their income. The competition that the Indian outsourcing industry faces has also intensified.

The national average raise, according to a survey by IDC, the market intelligence firm, was about 1.4 percent, with most of the salary gains going to those with the most experience. This is a huge change from the boom years of Indian outsourcing, when wages rose regularly by double digits. They increased 18 percent in 2007-08 alone, and close to 30 percent per year for the five previous years, reports BusinessWeek.

The 2010 fiscal year, which ends in March, will be the first time the industry's top players will see a revenue decline, according to their own predictions. Infosys expects a 3.1 percent decline in revenue to about $4.5 billion and Wipro expects revenues for the quarter ended Sept. 30 to drop to $1.05 billion from $1.11 billion a year earlier.

India's IT firms have been trying to get contracts from around the world, including $2 billion worth of U.S. Government deals, and $700 million in Latin America. But in August, when BP looked for a contract to develop applications for its business, it divided the project between IBM, which has some 90,000 people in India, and the top three Indian IT companies. Experts feel that the competition will intensify further after Dell's acquisition of Perot Systems, which has about 9,000 employees in India.