Indian IT Vendors to Cash In on U.S. Recovery

With top U.S. banks coming out of the recession with the help of the Troubled Asset Relief Program, Indian outsourcers are awaiting gains valued at $1 billion from offshoring projects in the next couple of years.

As the U.S. economy signals a rebound from the recent economic turmoil stemming from the subprime debacle, outsourcing vendors like Tata Consultancy Services, Wipro and Infosys are eager to cash in on the recovery.

Experts in the industry like Banking Sourcing Practice Director at Nelson Hall, Andy Efstathiou, say that banks in the U.S. have begun to push offshoring. Banks like Goldman Sachs, Morgan Stanley and JP Morgan were granted approval for repurchasing $68 billion worth of government stake in early 2009.

In addition, American Express, Capital One, and Bank of New York have also begun their repayment of government debt. These companies are also looking to outsource their IT and back office work to locations like India. Although most of these banks had put offshoring decisions on the sidelines while they were coping with the TARP funding, they were also undergoing restructuring.

Andy Efstathiou told the Economic Times that during the start of the credit crunch, offshoring contracts were postponed. However, this scenario is beginning to change. He added that the fourth quarter 2009 is seeing about 20% higher offshoring contracts than in the same quarter last year.

Moreover, analysts point out that the U.S. government's decision to allow for repayment of TARP funds is an indication that there is pressure for companies to operate independently, without government interference.