Outsourcing firms look to India for growth

If the conference was any indicator, financial turmoil in the US and shifting patterns of global growth are making the market for offshore services more decentralized.

This year’s 1,200 delegates came from 20 countries, up from 14 last year. With budgets shrinking and decision making frozen in the developed world, India, long ignored because of its small market and piddling margins, has become a particular focus of hope for revenue-hungry firms.

“The IT industry has looked outwards. Now it is time to look inwards," commerce minister Kamal Nath told delegates.

The potential for technology in India is plain: Just 2% of Indians have computers; half the population doesn’t have access to primary health care; 80% of households don’t use banks; and there’s a dire need for teachers. All are problems technology could help solve.

India’s information technology services sector grew 20% this year and hardware sales surged 17%, according to Nasscom.

Cisco, the world’s largest maker of computer networking gear, has moved aggressively into India, investing more than $1.2 billion since 2005. The company plans to make Bangalore, India’s outsourcing hub, its second global headquarters, after the United States.

“There’s a high probability that India will have the highest GDP growth of any of the developed and developing countries next year," said Cisco chief executive John Chambers.

But others greet India’s shining potential with skepticism.

India will account for just $34 billion of the $1.66 trillion global information technology services market this year, according to Forrester Research.

Infosys co-chairman Nandan Nilekani said India certainly “won’t be a substitute for de-growth globally."

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