Wednesday, October 3, 2007

NASSCOM says no slowdown in outsourcing to India

India’s National Association of Software and Service Companies (NASSCOM) in Delhi said that India is on track to achieve US$60 billion in exports by 2010, despite the appreciation of the Indian Rupee, according to a report by AFP.

NASSCOM’s President Kiran Karnik said Wednesday that it does not see an export slowdown, but added the appreciation of the rupee could weigh on margins and profits, according to the report.

The rupee has risen by more than 11 percent this year against the dollar, leading to speculation that Indian outsourcers, who get over 60 percent of their revenue from the US, may be badly hit. There was also speculation that Indian outsourcers were setting up operations outside India to counter the appreciation of the Rupee, and higher wages in India.

However, as pointed out in this blog in September, India’s outsourcing industry is in fine fettle, but for possibly a few percentage point drops in their whopping profitability and Rupee earnings. The post said:

“But even as (Indian outsourcers) realizations are going down, their costs of keeping staff on-site at client sites in the US is also coming down. Other dollar denominated costs are also coming down. This is not to say that these companies won’t be affected at all, but expect a few percentage points drop in margins.

As usual the top players like Infosys Technologies Ltd., Tata Consultancy Services Ltd. (TCS), and Wipro Ltd. will report next month robust quarterly revenue and profits growth, that are the envy of their peers in the US and Europe.”

The slow-down in the sub-prime mortgages market in the US may have also impacted some Indian outsourcers, but only marginally, and the staff were quickly shifted to other clients.

Confident of the outlook for the industry, Indian outsourcers now say that the appreciation of the Rupee and the slow-down in the sub-prime mortgages market are part of normal risks they have to deal with in the business.

Related article:
Indian outsourcers not floundering, not migrating

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