India’s flagship outsourcing sector hits tough times

NEW DELHI, August 6, 2009 (AFP) – These are tough times for India’s flagship outsourcing industry whose skilled, low-cost workforce helped plant the country on the global business map. With the world in the grip of the worst economic slump since the 1930s, revenue growth from outsourcing — subcontracting work to a third-party company — is slowing sharply after years of posting scorching double-digit increases.

“IT budgets are still being cut and consumers will need a lot more persuading before they can feel confident enough to loosen purse strings,” Richard Gordon, head of global forecasting at Gartner consultancy, said.

“The full impact of the global recession on the IT services and telecommunications sectors is still emerging,” he added in a recent outlook.

Now, the National Association of Software and Service Companies, or Nasscom, India’s top outsourcing body, projects the sector’s export revenues will rise by just four to seven percent this year to at most 50 billion dollars.

That’s down sharply from the 16 percent logged in the last financial year to March and the 30 percent rise the industry clocked annually for most of the decade as the country became