Trends in Outsourcing Business in India - 2006

Trends in Outsourcing

In 3^rd qtr 2006, India continues to be the preferred destination for Outsourcing IT projects.

Major companies such as IBM, Infosys, TCS, Wipro are continuing to expand their employee base in India to augment the growing business.

IBM's global operations recently announced the opening of new software development centers in Pune, India, and at Beijing, China. The centers will each be staffed by 500 developers focused on creating so-called service-oriented architectures for customers around the world, including those located in the United States.

SOA based applications have a large market share in the coming years and IBM as well as Oracle are investing heavily in this area and adopting the use of standard open source technology.

IBM is looking at having about 55,000 employees in India by next year which will be about 20% of its worldwide workforce of 3 Lakhs or 300,000.

Infosys, the second largest Indian software exporter, had great year so far and the business deals with U.S. firms that helped drive the bottom lines with the revenues for the quarter ending Sept is at $746 million, up by over 40 percent and it expects revenues for the fiscal year ending March 2007 to be over $3 billion.

TCS and Wipro also had a very good year so far. However the number of big deals between $500 million and $1 billion is appear to be declining, smaller contracts of less than $250 million are on the rise.

The attrition rate is also high at around 15% and these large companies giving salary increases to keep the attrition rate in check.

The operating margins for these outsourcing companies are stagnant or increasing at a moderate pace due to the increase in salaries.

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