Tuesday, August 02, 2005

India's IT sector shines brighter despite challenges

In the 'flat world', with all-round level-playing field created by technology, India has emerged as a global brand name in providing cheaper and high-quality information technology services that rakes in billions of dollars from major global giants like General Electric, Boeing and Citibank. As many as 50 percent of Fortune 500 companies are clients of Indian IT firms and over 200 of these global majors are currently outsourcing their support services to India, according to a Deutsche Bank study. India's leadership over other competing outsourcing destinations is driven by strong fundamentals such as a large pool of qualified, English-speaking manpower and an emphasis on delivering quality at a significant cost arbitrage. Experts say with the protests in the West against the shipping of tech jobs to low cost economies slowly waning with greater realization about its advantages, more and more local companies are likely to reap the benefits of providing services to overseas clients. A great example of this is Indian IT powerhouse Infosys, which created a wholly owned US-based subsidiary called Infosys Consulting last year, which is changing the face of the global consulting business. The Infosys Consulting business model is based on providing customers far greater value for money compared to traditional consulting firms based on its experience.The Indian IT and IT-enabled services (ITES) industry recorded 34.5 percent growth in exports, touching $17.2 billion in 2004-05 that ended March 31, says the National Association of Software and Service Companies (Nasscom). The IT industry employee base in India crossed the one million mark in the fiscal year ended March 31, 2005. Indirect employment attributed to the IT-ITES sector was 2.5 million in fiscal 2004-05. While the US and Britain still remain the dominant markets, Indian companies are gaining traction in newer geographies like Japan and Singapore. In Europe, Britain, Germany and France are the top three markets for the Indian technology outsourcing companies. Other important export destinations include Italy, Finland, Sweden, the Netherlands and Switzerland. For companies like TCS, Europe is one of the main strategic growth markets and the company has 19 offices across 11 countries in the European Union, employing over 700 people. Enthused by the growth opportunities in India, a slew of global technology majors are rushing to set up shop or increase their presence in India. US tech giant IBM reportedly plans to increase its headcount in India by 14,000 workers this year even as it retrenches up to 13,000 jobs in Europe and the US. This will see IBM's Indian workforce rising to 38,196 professionals in 2005 from 24,150 in 2004. IBM India has seen double-digit growth in the last five years. Similarly, leading business software solutions provider SAP said in July it planned to double its headcount in India to 4,000 by the end of next year. SAP Labs India has the largest development facility of the company outside Germany.
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