by CIO Staff

India’s Outsourcing Industry to Grow by 33%

Jan 23, 20072 mins

Benefiting from a boom in offshore outsourcing, India’s software and services exports are expected to grow by 33 percent to more than US$31 billion in the Indian fiscal year that ends March 31, according to data released Tuesday by the National Association of Software and Service Companies (Nasscom).

India’s top outsourcing companies—Tata Consultancy Services, Infosys Technologies and Wipro—have all reported strong revenue and profit growth for the quarter that ended Dec. 31, mainly on increased volumes of business.

The country is on course to achieve $60 billion in exports by 2010, Nasscom said.

IT services including software development are expected to contribute $18 billion to exports in the year that ends March 31, while business process outsourcing (BPO) and call centers are likely to contribute another $8.3 billion, according to Nasscom, in Delhi. Engineering services, research and development (R&D) services, and product development work are expected to contribute $5 billion.

The data includes exports by Indian outsourcing companies, and Indian operations of multinational services and technology companies like IBM, Dell, Oracle and Accenture.

The total Indian software and services industry, including sales to the domestic market, is expected to grow during the fiscal year by about 31 percent to $39.7 billion, Nasscom said.

Employment in the country’s software and services sector is likely to reach 1.6 million by March 31, up from 1.28 million in the previous year, according to Nasscom.

India is riding a boom in outsourcing. A report released by McKinsey & Co. and Nasscom has forecast that the country’s outsourcing industry can grow at an annual rate of more than 25 percent to generate export revenue of about $60 billion by 2010.

To achieve this, however, India will have to improve the quality of education and train more staff to counter an expected shortage of 500,000 staff by 2010, according to Nasscom.

The association has proposed setting up a chain of finishing schools for IT professionals to make them more employable. A three- to four-month honing of technical skills and training on “soft skills” like better communications will help bridge the gap between staff supply and demand by at least 30 percent to 40 percent, Nasscom said.

-John Ribeiro, IDG News Service (Bangalore Bureau)

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