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Global Economics

India's Outsource Giants Feeling the Pinch

Infosys, Tata, and Wipro are all suffering sluggish growth in contrast to their clients' record spending on global services in 2007

The country's big three outsourcers Infosys, Tata Consultancy Services, and Wipro experienced slow revenue or income growth in their just-announced quarterly results for the period that ended June 30.

The results fly in the face of figures in the quarterly index by outsourcing adviser TPI, which shows global spending on outsourcing is on track to break records in 2008, with Europe forging the biggest contracts.

All three of the Indian outsourcers blamed challenging global economic conditions, with Infosys warning the next quarter may continue to be difficult as companies postpone decisions on outsourcing.

Wipro experienced a rise in profits of 15 percent over the same period last year, growing to US$187.5 million. Infosys reported revenue of US$1.16 billion, up 24.5 percent over the same period last year. Tata's profit was up just 2 percent to US$296 million.

Meanwhile TPI's index found that companies signed US$25.6 billion worth of outsourcing contracts in the second quarter of 2008—the third quarter in a row to break the US$20 billion mark and the best recorded performance of three consecutive quarters.

TPI says this year is on track to see the highest total contract value for outsourcing deals on record.

"Companies across industry segments are expressing their concerns regarding the uncertain business conditions by taking steps to reduce operational costs, and the outsourcing industry is benefiting," Peter Allen, partner and managing director of TPI, said in a statement.

Provided by ZDNet Asia—Where Technology Means Business

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