Study: India's outsourcing industry continues to boom

The U.S. and U.K. markets accounted for about 85% of revenue

Despite protests in Europe and the U.S. against outsourcing and the moving of jobs to India, the country's software services and business process outsourcing (BPO) services business is booming, according to data released today by the National Association of Software and Service Companies (NASSCOM) in Delhi.

India's software and services exports business recorded revenue of $12.5 billion in the fiscal year that ended March 31, up by 30.5% over revenue of $9.6 billion in the previous year, according to NASSCOM. The revenue figures include billings by Indian outsourcers and wholly owned software development and BPO operations in India of multinational companies.

The U.S. and U.K. markets accounted for about 85% of revenue, NASSCOM said.

"Despite the challenges such as slow growth of IT spending globally, a jobless recovery in major markets and appreciation of the Indian rupee [against the U.S. dollar], the Indian software and services industry has been able to maintain its growth momentum and consolidate its partnership with overseas customers, adding to their competitiveness," said Jerry Rao, chairman of NASSCOM.

India's software and services exports are projected to grow by about 32% in the year ending March 31, 2005, to more than $16.3 billion, according to NASSCOM.

Of the total software and services exports in the year, revenues from IT products and services grew by 25%, to $8.9 billion. The BPO business grew by 46%, to revenue of $3.6 billion, and added 70,000 new jobs. BPO subsidiaries of multinational companies accounted for 65% of BPO revenues.

Aiming to cash in on the high growth in the software and services sector, 112 start-up companies set up operations between April 2003 and March 31 of this year. That's up from 47 in the previous fiscal year, according to Kiran Karnik, president of NASSCOM.

Copyright © 2004 IDG Communications, Inc.

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