IT Outsourcing India

New report by research firm XMG Global sees the market growing 14.4% this year, with India and China as the top two countries

In the report by Canada-based research firm XMG Global, India and China were singled out as the market’s top revenue generators, pulling in revenues worth US$48 billion and US$28 billion, respectively.

According to Vincent Altez, senior analyst at XMG, India will account for 44.8 percent of the global market, while China will hold at 25.9 percent. India’s market share is expected to remain similar over 2008, due in large to accounting adjustments following Satyam’s financial scandal and demand moving to other offshore countries.

Altez said in the report: "We are seeing new levels of normalcy in which the recession has provided the opportunity to rationalize, and shift work to other offshore destinations other than India.

XMG named the Philippines as the third-best performing destination, growing an estimated of 21.7 percent to register US$7.3 billion in revenues by year-end. The figure is still lower than the initial forecast of 24 percent, the research firm noted, where demand has been sluggish due to slower growth for IT services and delay in expansion plans by major market players in the country.

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China, aiming to rival India as an outsourcing destination, has launched measures to help local businesses providing back-office services, according to a new policy framework announced on Wednesday.

Chinese banks were told to provide more credit to outsourcing service firms, especially in 20 cities designated by Beijing as "bases" for the industry.

The details were published on the People’s Bank of China website (www.pbc.gov.cn).

Insurance firms were ordered to develop more policies to suit the outsourcing business and authorities were urged to work out detailed guidelines by the end of this month to help their local firms.

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The countrys second largest information technology IT services exporter Infosys Technologies Ltd has bid for at least 10 large government projects as part of a drive to lower its dependence on the US market, an official said. Infosys, which gets at least half its business from the US, plans to generate USD1 billion Rs4,870 crore now in revenue from the Indian market in two-three years versus an insignificant level now, the head of its India business unit said.

There are large opportunities in India. So, we are definitely going to go after these kinds of businesses very aggressively in India, Binod Rangadore said. We have a very healthy pipeline right now.

The market for technology and business outsourcing services in India is expected to expand fivefold by 2020 to USD90-100 billion on the back of a growing economy, according to a recent study by the National Association of Software and Services Companies Nasscom and consultancy McKinsey and Co.

Outsourcing firms such as Infosys and rival Tata Consultancy Services Ltd are tapping new markets such as India, China, Japan and countries in Europe to beat a recession in the US.

The Indian firms face competition from big global players such as International Business Machines Corp., Hewlett-Packard Co. and Accenture that have raided their home turf as they look for growth outside their mature markets.

US business software maker CA expects its bookings, an indicator of future business, will rise 50percent in the year to March and by 30-40percent for the following two years on growing technology spending.

Infosys, which set up its India business unit in late 2007 as part of a strategy to diversify its revenue base, has put in bids for IT services contracts from the railways and state-run telecom Bharat Sanchar Nigam Ltd, among others, Rangadore said. He declined to set a time frame for the outcome of the bids.

The US market had contributed 63.2percent of Infosys 2008-09 revenue of USD4.4 billion, with just 1.3percent coming from India.

Rangadore said the business from IT services in India was very small and the bulk of the revenue in India came from Finacle, the banking solutions and services unit of Infosys.

Last month, Infosys said it had won a contract to design, develop and support a portal for the ministry of commerce and industry. A government official said the contract was valued at Rs15 crore for three years. Infosys, which has a market value of USD23 billion, has also won a project from the tax authorities for a project to enable electronic filing by taxpayers, Rangadore said. He said spending on technology by private companies was seeing a slowdown in India due to the economic downturn, but investment by the government remained robust and was likely to increase in the near term.

A host of IT services firms are expected to vie for the governments initiative to provide the countrys around 1 billion people with identity cards, a new project which is being headed by Infosys co-founder Nandan Nilekani.

Source: http://www.offshoringtimes.com/

India’s information technology sector, which rose to prominence by targeting overseas markets, has found an unexpected way to offset the global economic crisis: tapping the country’s growing domestic appetite for outsourcing.

The country’s top computer services groups, such as Wipro Technologies, are hauling in larger and more complex contracts from India’s booming mobile telephony industry and from an initiative in the central and state governments to upgrade systems.

“A 40-50 per cent compound annual growth rate over the last three years – that is the sort of growth we have been driving in India,” said Suresh Vaswani, joint chief executive of Wipro, the country’s third largest IT outsourcing group.

India’s outsourcing industry has risen to become the foundation of the country’s modern economy through aggressive targeting of export earnings, which reached an estimated $47.3bn in the year ended March, up 15.8 per cent against a year earlier.

But the growth of India’s modern economy is bringing this cycle full circle, with the domestic information technology outsourcing market beginning to provide more opportunities for Wipro and peers such as Tata Consultancy Services.

The National Association of Software Services Companies, India’s IT industry body, calculates that annual sales in the domestic outsourcing sector have grown to $24.3bn from $13.2bn just three years ago.

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