IT Outsourcing India

Indian outsourcing companies figure among the top ten worldwide in IT infrastructure services, reflecting the growing appeal of offshore delivery of these services, according to outsourcing consultancy Technology Partners International (TPI).

Indian outsourcers figured in the top ten by value of contracts closed in the first half of this year, not only in their traditionally strong area of application development and maintenance (ADM), but also in infrastructure services, Siddharth Pai, a partner at TPI, said on Thursday.

That Indian companies such as HCL Technologies and Wipro have made it to the top ten in infrastructure services, a relatively new area in IT services for Indian outsourcers, suggests that customers are now considering seriously the option of remote delivery of these services from offshore locations like India, Pai said.

Indian companies figured in the top ten last year in ADM but not in infrastructure services, according to TPI data.

TPI released its index this week covering the global commercial outsourcing market in the second quarter and the first half of this year.

The market for outsourcing has shrunk to US$40.2 billion in contracts in the first half of this year from $51.5 billion in the first half of last year. TPI monitors contracts of a value of $25 million and above.

It is unlikely that the outsourcing market this year will grow to last year’s level of $93.1 billion, and is more likely to end this year with total contracts of less than $80 billion, Pai said.

Top Indian outsourcers have reported flat or declining revenue in the quarter ended June 30. Infosys, India’s second largest outsourcer, has forecast that revenue for its fiscal year ending March 31, 2010 will decline by 3.1 to 4.6 percent over revenue in the previous year.

Source: http://www.pcworld.com/

Wipro, one of India’s largest outsourcing companies, reported a 3.3 percent dip in U.S. dollar revenue for IT services during the quarter ended June 30.

Wipro’s revenue from IT services during the quarter was about US$1 billion, and the company said it expects revenue will be about the same during the current quarter. IT services accounted for 77 percent of Wipro’s revenue during the previous period.

Besides IT services, Wipro has an IT products business, and consumer care and lighting businesses.

Other large Indian outsourcing companies, including Tata Consultancy Services, the largest, also reported a decline in their U.S. dollar revenue during the quarter. India’s second largest outsourcing company, Infosys Technologies, said earlier this month that revenue for its current fiscal year, which ends March 31, 2010, will decline by 3.1 percent to 4.6 percent compared to the previous year.

The results for these outsourcing companies look better in Indian rupee, because of the long-term depreciation of the rupee against the dollar and currency hedging, said Siddharth Pai, a partner at outsourcing consultancy firm, Technology Partners International.

For example, Wipro said that its revenue from IT services in the quarter ended June 30 was 48.27 billion [b] Indian rupees (US$1 billion at the exchange rate on the last date of the quarter), up by 10 percent from the same quarter in the previous year.

However, the U.S. dollar revenue is the better indicator of the performance of Indian outsourcers because 70 percent of their revenue is denominated in dollars, Pai said.

Earlier this month, the National Association of Software and Service Companies said dollar revenue growth from offshore outsourcing may drop to less than 10 percent during the current fiscal year from 29 percent two years ago.

Source: http://www.businessweek.com/