Infosys growth reflects outsourcing gains

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January 11, 2006 (Computerworld) -- In an indicator of the growing use of offshore outsourcing, Infosys Technologies Limited -- one the major India-based offshore providers -- said it added 14,200 employees last year, bringing its total workforce to 49,422. That represents a 40% increase in the number of workers at the company, according to the Infosys' latest quarterly report released today.

The employee growth at the Bangalore-based company parallels a rise in revenues, which rose 32% to $559 million for the quarter ending last month when compared to the same quarter of 2004.

The company's growth is fueled, in part, by the increasing use of outsourcing by U.S. companies. There were 293 outsourcing contracts awarded last year, up from 269 in 2004, said Technology Partners International Inc. (TPI), which tracks the outsourcing market. The contracts include IT and business process outsourcing deals, both in the U.S. and overseas.

Despite the increase in outsourcing contracts, the total value of global commercial outsourcing contracts declined slightly last year to $75 billion from $78 billion in 2004. That drop was due to cost savings from contract restructuring, some contract terminations and smaller contracts, said Peter Allen, managing director of TPI. "But you are still seeing more and more outsourcing contracts awarded," he said.

In fact, of the 175 global 2000 corporations signing commercial outsourcing deals in 2005, 57 did so for the first time, said Allen.

There is also a shift by outsourcing users away from large comprehensive deals; Instead, they're opting for companies that provide outsourcing services for a single function, such as a help desk, said Allen.

In a separate report, Reston, Va. consultancy Input said today that the federal outsourcing market is expected to grow at 8% annually, from $12.2 billion last year to $17.6 billion by fiscal year 2010. Input, which tracks the U.S. government spending, said tightening federal budgets is one reason for the increased outsourcing, Input said.

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