Tuesday, June 12, 2007

Indian Poised To Win More Higher-Order Outsourcing

Source: Forbes.com

They may be under fire in the U.S. over visas, but India believes its tech companies are poised to capture a bigger slice of the global outsourcing market.

By 2010, the country will have 15% of the outsourcing market for higher-order knowledge processing work, such as research and data management, Commerce and Industry Minister Kamal Nath said Sunday in a speech at the 11th International Economic Forum at St. Petersburg, Russia.

Indian companies had 11% of the market for outsourcing contracts above $50 million in 2006, according to the National Association of Software Services Companies. India’s software and services exports crossed $31 billion in fiscal 2007.

But Indian tech companies, which draw the majority of revenues from the North American markets, have been in the news lately after two senators asked nine companies, including biggies like Wipro (nyse: WIT - news - people ) and Infosys (nasdaq: INFY - news - people ), for details on their U.S. workforces.

In a statement last week, Nath denied the allegations. “Temporary movement of skilled professionals is an essential component of the global services economy and bears no relation to immigration issues,” he said.

The minister linked India’s cooperation on trade issues at the WTO to agreement on the services industry. “Services are an important component of the breakthrough in the current WTO negotiations and any move which vitiates the current progress will only frustrate the progress in bringing the round to a successful completion,” he said.

At the St. Petersburg conference, he waxed eloquent on India’s growing importance on the global stage. “What better example to cite the growing clout of emerging economies than India, which has recorded the fastest GDP growth in 18 years, with the economy growing 9.4% in 2006-07,” Nath said.

India’s high growth has been powered by the manufacturing sector, which grew 12.3% in fiscal 2006-07 as compared to 9.1% a year earlier. But Nath also spoke of investment opportunities in the farm and food-processing sector, which hasn’t grown at the scorching rates of some other sectors and has been identified as a priority area by the government.

He also invited investment in retail, where India doesn’t yet allow foreign players in the multibrand segment. Organized retailing in India is predicted to expand 37% in 2007 and 42% in 2008. At present, small corner stores account for the bulk of the market.