Source: www.computing.co.uk
Indian supplier sees growing demand for outsourced IT services from European companies

Indian outsourcing giant Infosys posted revenue of $4.2bn (£2.1bn) for the 2007 financial year, 26 per cent up on $3.1bn (£1.6bn) of sales in 2006, beating analyst estimates.

Net income for the year was $1.2bn (£610m), compared to $850m (£483m) posted in 2006.

The software and services specialist has benefited from European and US companies increasing their spend on outsourced IT services over the past 12 months.

Despite raising the average wages of its Indian employees by about 12 per cent last year, Infosys can still deliver equivalent services at a lower cost than in-house IT departments. The company and its subsidiaries now employ 92,187 people.

Downturn or not, Infosys said it is confident it can retain and win new business from European and US firms looking to reduce their operational costs. The company has forecast revenue of $5.1bn (£2.5bn) for the year ending 31 March 2009.

Europe contributed 29.3 per cent of Infosys’s sales in the fourth quarter of 2007, compared with 26.6 per cent a year earlier. North America generated 60.7 per cent, said the company.

Source: infotech.indiatimes.com

BANGALORE: A recession in the US may now be real and official. But irrespective of the downturn, Indian tech enterprises have some reason to smile. A new breed of outsourcers are emerging in the US, who could help Indian providers to offset some of the impact of the recession on their businesses.

These are the thousands of small and medium enterprises that are increasingly waking up to cash in on the outsourcing wave, a market opportunity explored by their big daddies for a couple of decades now. “SMEs in the US are under severe pressure to increase profitability and business margins. This will force them to outsource and even have M&A arrangements with Indian firms. India is going to be a great beneficiary of this trend. This will substantially offset or minimise the impact of the US recession on Indian industry,” said Adam Larkey, partner at Wolet Capital Corporation, a New York-based investment banking firm.

By March 2008, India had received SME outsourcing deals worth $7 billion from the US as against $6.2 billion in the previous year. This is expected to be $8 billion by March 2009 and $11 billion by March 2010.

The total outsourcing from the US by that time would be $54 billion. “Almost every Fortune 500 firm and other major companies already outsource to India. By mid this year, hundreds of small US firms are expected to evince interest in outsourcing engagements with Indian partners. It will gain momentum during 2009 while a quantum jump is expected from 2010 onwards,’’ said Avinash Vashishtha, managing director, Tholons, an investment, advisory and research firm.

SMEs account for 80 per cent of the US industry in terms of volume. The US currently has around 20,000 small and medium firms in the revenue bracket of $2 million to $500 mn; 6,000 companies in the $500 mn to $2 billion bracket , and another 3,000 in the $2 bn to $5 bn category. The country has around 2,000 firms with revenues of $5 billion and another 1,400 companies in the $5 billion to $10 billion bracket.

‘‘Outsourcing by a large army of these companies will definitely reduce the impact of the US recession on Indian players. In fact, this additional flow of outsourcing will give a cushioning effect to the domestic industry,’’ said S Sabyasachi, senior director, neoIT, an offshore advisory firm.