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2010: What is in Store for Indian Outsourcing Industry?

Vimali Swamy
Tuesday, March 2, 2010
Vimali Swamy
A year after the recession, As the Indian IT industry steps into the fourth quarter of its operations, the question remains - is the worst in global economy over? Hopefully it is, at least by the looks of the financial results of top Indian IT players. The third quarter recorded an improved performance over the second, and this growth in the businesses of Indian outsourcing firms is attributed to improving business sentiments across the globe.

TCS, Infosys, and Wipro, which can do everything from call center management and claims processing to software development and consulting, all reported better than expected results for the December quarter with an average of 3 percent growth quarter on quarter. Revenues and volumes grew, signaling that the cost-cutting imperative of this last, lean year may be over for India's $60 billion software services industry. The companies are in an upbeat mood and are looking forward to great times ahead by launching new services, increasing their offerings, and identifying new areas of business while reviving the existing ones.

While Infosys is looking at new markets like China, the Middle East, and Latin America with a host of new services, TCS is looking at growth sectors like energy, utilities, and BFSI. Wipro on the other end is betting on green technologies.

There are multiple reasons for this. Clients have eased pressure on billing rates, which is evident from the increased operating margins of these companies. New market strategies in regions such as India and West Asia have started paying initial dividends, especially for players such as Wipro. Add to that, some of the big clients have actually gone ahead and increased their IT budget outlays and there are less cancellations of orders now.

“In the past quarter, we have received positive business growth across all verticals. Demand recovery that started in the BFSI segment has become broad based, with telecom and technology posting healthy growth. Improving market sentiments also reflected in the enterprise solutions and the financial products segments,” says S. Mahalingam, CFO, TCS. The company also added 32 new clients and 7,000 new employees. Similarly, Infosys and Wipro have expanded their global workforces by an average of 5.1 percent last quarter.

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