But Infosys’ same-year, quarter-to-quarter numbers told a different story. Infosys’ total revenues in the third quarter of 2001-02 increased by a mere 1.64 percent over the previous quarter, rising to $140.59 million from $138.32 million. Meanwhile, the company’s net profit was up 2.22 percent to $43.83 million in Q3, compared to $42.89 million in Q2. Infosys’ comparatively sluggish quarter-to-quarter growth reflected an apparent slowdown in IT services.

“Software spending continued to weaken globally, and the Sept. 11 attacks on the U.S., Infosys’ main market, created a lot of uncertainty in the external environment,” says Narayana Murthy, chairman of Infosys.

The story was similar at Wipro Ltd. Wipro recorded total revenues of $186.36 million in the third quarter of 2001-02, a 12-percent gain over the $166 million in revenues the company recorded in the third quarter of the previous fiscal year. Wipro’s net profit in the third quarter of 2001-02 was 17.4 percent higher than its net profit in Q3 of 2000-01, increasing to $47.57 million from $40.51 million.

But between the second and third quarters of 2001-02, Wipro’s revenues actually declined 0.2 percent to $186.36 million from 186.72 million , while its net profits rose 3.3 percent to $47.57 million from $46.06 million.

At Satyam, revenues totaled $93 million in Q3 2001-02, 34 percent more than the company’s revenue in the corresponding quarter of the previous fiscal year. Satyam’s year-to-year net profit increased 36 percent, to $25 million. But the company’s quarter-to-quarter results were more modest. Satyam recorded a 2.14 percent increase in revenues in the third quarter of 2001-02, compared to its revenue performance in the previous quarter.

Faced with these still impressive, but ultimately rather mixed third-quarter results, Wipro, Infosys and Satyam are re-examining their strategies and exploring new revenue streams. All three companies are eager to enter the business process outsourcing (BPO) services market. According to a report by the Gartner Group, the BPO market will reach $543 billion by 2004, making it a hot opportunity for Indian software firms.

Infosys updated its Web site last month to add BPO to its list of services. Nandan Nilekani, the company’s new CEO, views BPO as a great opportunity for Indian IT companies. Satyam’s B. Ramalinga Raju has also decided to venture into BPO. According to Wipro’s top brass, the pressure to diversify into BPO is coming from the company’s customers.

Indian software companies’ demonstrated ability to manage remote projects could give them a leg up in the BPO services market. With their sales and marketing teams in place in European and American markets, they can leverage their brand equity to capture business.

Many European and U.S. companies can outsource some of their administrative functions like HR and accounting to specialist firms.

Phiroz Vandrevala, chairman of National Association of Software and Services Companies (Nasscom), says Indian companies’ competitiveness in this arena is improving. “Fifty percent of project contracts were won against stiff global competition,” Vandrevala says. “Indian IT firms can benefit from emerging verticals like retail, utilities, and health care.”

But the jury is still out on whether companies like Wipro, Infosys and Satyam will be successful in their new business strategy to venture into BPO services.