Indian services on the up

Outsourcing market sees strong growth

Indian outsourcing firms are continuing to post strong results despite concerns that rising salaries, the growing strength of the rupee and labour shortages would affect the market.

Infosys Technologies has reported an increase in fourth-quarter sales of 45 per cent to $863m (£430m) and a rise in annual sales of 44 per cent to $3.1bn (£1.5bn).

Tata Consultancy Services (TCS) increased fourth-quarter sales by eight per cent to $1.2bn (£598m) and annual sales by 41 per cent to $4.3bn (£2.1bn) thanks to a growth in infrastructure, consulting and business intelligence services.

HCL Technologies has posted third-quarter sales that rose 44 per cent to $362m (£181m), which it is attributing to a more diversified offering, including infrastructure and business process outsourcing services.

The National Outsourcing Association says that Indian companies are continuing to compete globally, despite concerns over the strength of the market.

Ovum analyst Dominique Raviart says that Infosys, for example, is continuing to grow in regions where it is already well established.

‘This can also be seen across other firms such as TCS and Wipro, and highlights the significant traction that offshore players have in growing existing customer accounts,’ he said.

‘The beauty of the offshore business model is that Indian IT firms can accept utilisation rates that are much lower than a European firm can accept if it wants to stay profitable.’