India's offshore outsourcing revenues grew 34.5%

India's software and services exports totaled $17.2 billion in the fiscal year to March 31 this year, up by 34.5% from the previous year, according to India's National Association of Software and Service Companies (Nasscom) in Delhi.

The country's exports of software and services are expected to grow by between 30% and 32% in the fiscal year to March 31, 2006, Nasscom President Kiran Karnik said Thursday in Bangalore.

From the start of this year to March 31, exports of IT software and services grew by 30.5% to $12 billion, while exports of business process outsourcing (BPO), call center and related services grew by 44.5% to $5.2 billion. The growth in exports came despite fierce opposition last year to offshore outsourcing from politicians and workers unions in the U.S., Karnik said.

The U.S. accounted for about 68% of India's outsourcing exports, with Europe accounting for another 24%.

About 35% of Indian exports of IT services and 60% to 65% of the exports of BPO, call center and related services came from wholly owned operations in India of multinational companies, according to Sunil Mehta, vice president of Nasscom. An addition to the Indian outsourcing companies offering services to companies in the U.S. and Europe, a number of multinational services companies, technology companies and user companies have set up software development, BPO and call center subsidiaries in India.

Domestic (non-export) revenue from software and services totaled $4.8 billion in the year to March 31.

India's outsourcing industry employs over 1 million people, according to Karnik, who added that jobs were created not only in the larger cities but in smaller towns.

However as demand for Indian software, BPO, call center and other services grew, the industry faced a shortage of staffers, which is particularly acute in the BPO and call center industry, Karnik said.

Even as staff salaries increased because of the staff shortage, companies were able to contain and at times even lower their costs by better utilization of resources, a decrease in infrastructure costs and lower telecommunications tariffs, he added.

For the long term, however, India's outsourcing industry will have to forge ties with educational institutions to ensure a larger supply of quality staffing for the industry, said Subramanian Ramadorai, chairman of Nasscom and chief executive officer of Mumbai-based Tata Consultancy Services Ltd., India's largest outsourcer. The industry will also have to innovate its services and processes to add greater value to the customer and improve productivity, he added.


Copyright © 2005 IDG Communications, Inc.

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