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India's outsourcing sector sees export growth slide
New Delhi (AFP) July 30, 2009 India's flagship outsourcing sector, accustomed to double-digit expansion, forecast Wednesday that export growth would slide this fiscal year due to the impact of the economic crisis. Revenues from exports of software and back-office outsourcing services rose by 16 percent in the last fiscal year to March to 46.3 billion dollars, the National Association of Software and Service Companies (Nasscom) said. But Nasscom said export earnings would grow by just four to seven percent in the current year to around 48 billion to 50 billion dollars and blamed a "severe economic downturn in key markets." "Worldwide information technology spending growth is expected to come down further in 2009 and 2010," the association said in a statement. US and other foreign firms, drawn by India's vast, educated English-speaking workforce and labour costs that are much lower than in the West, have made a beeline for the country, farming out everything from answering banks' client calls to processing insurance claims and equity analysis. But the recession in the United States, which accounts for 60 percent of the Indian industry's revenues, and other parts of the world has put a crimp on customer spending. Aside from the economic downturn, Nasscom said the sector was facing other challenges, such as protectionist sentiment, especially in the United States. Outsourcing export revenues grew by a blistering 28 percent in the year to March 2007. The sector, which accounts for 5.8 percent of India's GDP, has played a key role in fuelling the country's new middle-class affluence, employing 2.23 million people directly and eight million indirectly. Revenues from the domestic IT market, which has become increasingly important as export growth has slowed, expanded by 21 percent to 570 billion rupees (11.8 billion dollars) last year. Nasscom forecast domestic revenues would grow in the current year by 15-18 percent to reach 650 to 670 billion rupees. Nasscom said that the sector's core US market was "starting to stabilise" but added "buyers remain cautious, large deals are missing." Adding to pressure is fierce competition from global rivals. However, it said the Indian information technology and business-process outsourcing industry "continues to exhibit resilience due to strong fundamentals." All three of India's top software service exporters defied the tough global conditions to post higher-than-expected first-quarter profits. Share This Article With Planet Earth
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