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Prosperity Continues for India's Information Technology Industry


India's leading software firms are reporting a surge in profits. The country's booming information technology industry is also expressing confidence about future growth.

India's top software firm, Tata Consultancy Services, says profits jumped by 54-percent in the last quarter. The country's second largest software services exporter, Infosys, says its net profits rose 52-percent in the same period.

Both companies are benefiting as U.S. and European companies cut costs by moving a variety of operations, such as software development, research and back office jobs, to India.

Nandan Nilekeni, chief executive officer at Infosys, says India's information technology companies remain on a high-growth track. But he says the booming industry has also created its own problems, including rising wages and high employee turnover. Companies are also grappling with a weakening dollar against the local currency. "Outsourcing will continue to be something which will grow. I think India continues to be well placed. Obviously there are some concerns of the appreciating rupee, employee cost and attrition as well as the overall infrastructure in the country," he says.

Infosys says it added more than 2,000 employees and 38 new customers in the last quarter. Its clients are mainly U.S.-based companies that range from retailers and manufacturers to big telecom, health and insurance firms. Tata Consultancy Services also enrolled new customers in several European countries.

Last year, India's IT industry watched with worry as the loss of American jobs to countries such as India became the center of a heated debate in the U.S. presidential campaign. But the issue appears to have been put on the backburner with the return of a Republican administration that supports free trade.

U.S. Senator Norm Coleman of Minnesota said on a recent visit to India that the issue of sending American jobs abroad remained politically sensitive. But he says free trade will ultimately benefit both sides as it helps create new jobs everywhere. "The issue is really jobs, and if we can figure out a way to grow jobs…in America at the same time we are growing jobs in India, I don't think that is the core problem. The issue is job growth, and we are seeing job growth in America from the relationship we have with other countries," he says.

India's National Association of Software and Service Companies estimates that the IT industry could create more than a million new jobs in India over the next five years.

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