India’s outsourcing industry to grow by 32.6 percent

Benefitting from a boom in offshore outsourcing, India’s software and services exports are estimated to grow by 32.6 percent to over $31 billion in the Indian fiscal year to 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 reported earlier this month strong growth in revenue and profits for the quarter ended December 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 to 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 a further $5.0 billion.

The data includes exports by both 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 estimated 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’s outsourcing industry is riding a boom in outsourcing. A report released by management consulting firm McKinsey & Co. and Nasscom has forecast that India’s outsourcing industry can grow at an annual rate of over 25 percent to generate export revenue of about $60 billion by 2010.

To get to this revenue, 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 the setting up of 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 manpower supply and demand by at least 30 to 40 percent, Nasscom said.