Momentum Improves for Indian Outsourcing Deals

Indian IT outsourcing giants like Wipro, TCS and Infosys say that a new momentum has emerged in outsourcing deals over the the last few months. The increase in contracts is probably the result of an increase in IT spending around the world.

The gains in contracts are more pronounced in sectors like utilities and energy, retail, telecom, and healthcare. In addition, financial services and banking, traditionally the biggest spenders on IT outsourcing seem to be on the incline as well.

Most of the contracts over a period of a few months have propped up from the Asia Pacific region and Europe, as opposed to the U.S. market. Indian vendors say that they are also gaining from recent moves to consolidate vendors at big IT spenders like Telestra, Aviva, and BP Plc.

S. Sabyasachi, advisory firm Tholons Inc. partner, said in a comment, there appears to be an incline in IT services demand - the focus seems to be pointed in the direction of spending linked to growth. He added, that clients who are anticipating growth in the post-recession phase are likely to spend funds for IT services after freezing such spending for a year or a year and a half.

This demand is expected to last until the middle of November since it is viewed as a short-term trigger. However, more clarity on the spending scenario will emerge by the end of the last quarter in 2009.

According to indicators at the present time, IT budgets for 2010 are speculated to be marginally lower than the previous year. Although most Indian outsourcers are pleased with the pace of recovery, S. Gopalakrishnan, CEO of Infosys, says that he would like to wait until more data is seen from two more quarters before assuming that the outsourcing sector is "out of the woods," reports The Hindu Business Line.

Surprisingly, Indian firms have been more vocal in advertising their client wins in recent months - this might be an indicator of just how competitive the Indian IT industry has becomes since the onset of the recession.

CEO of TCS,S. Ramadorai, said recently that deals in the pipeline are beginning to add up. The outsourcing firm is looking at work linked to integration in the U.S. financial services sector, which witnessed big name mergers and takeovers in 2008-09.

TCS would like to see some acceleration in its deal closures, said Ramadorai, adding that integration deals are in the offing. The company has some agreements with Merrill Lynch and Bank of America.