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India's IT Sector Benefits from International Outsourcing


India's leading information technology companies are reporting increased profits as they benefit from the international outsourcing business - work done in one country for a company in another.

Three of India's leading technology companies say their profits jumped by up to 28 percent in the quarter ending December.

The net profit of software company Wipro limited increased 19 percent - the largest increase the company has ever reported. India's second-largest software services provider, Infosys, has announced a better-than-expected 28 percent rise in profits, and another large IT company, Satyam, says its net profit jumped 25 percent. These companies are leaders in establishing India as a technology hub. The Indian IT companies have benefited from the trend of multinational technology and service industries cutting costs by sending more and more operations overseas.

American and European firms are sending out call center, software research, data processing and other operations to countries like India, where there is a huge skilled, English-speaking work force.

Lower wages in India enable the multinationals to cut costs and increase profits, while the extra business has been a boon for the Indian ITs.

The head of India's National Association of Software and Service Companies, Kiran Karnik, says Western companies are continuing to send more work to India despite an outcry in Britain and the United States about job losses.

"They seem to be substantially going ahead," said Mr. Karnik. "The economic compulsions are very high. In a globalizing world you have to be competitive, and if you are not competitive your competitor is going to swallow you up."

Satyam says it added 29 clients to its roster last year, including six Fortune 500 firms.

Executives of the other two companies say their business is also improving as overseas customers realize the value of what is now called outsourcing.

The boom in outsourcing business has signaled a turnaround for India's information technology sector, which had been affected somewhat by the global slowdown in technology spending over the last three years.

Indian companies now earn annual revenues of about $3 billion from the outsourcing business, and that figure is expected to jump to $15-20 billion in five years' time.

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