Strong Demand Powers Rise of Indian Outsourcing Providers


The Indian outsourcing industry has been growing due to surging global demand for its services.



Two of the main Indian IT outsourcing services providers, Infosys and Wipro, are anticipated to post revenue of USD 2 billion in the current fiscal year. The rising demand is also expected to reflect in the sales figures of a number of other companies like Cognizant and Satyam for fiscal year 2007. These companies are expected to report, on an average a 32 percent increase in sales and an average of about 27 percent in earnings for fiscal year 2006-2007.



However, the steep rise in the outsourcing industry is posing problems of scalability for smaller players in the BPO sector. In order to exploit the huge demand, it is essential for companies to offer scalable operations to their customers. Most of the small BPOs are currently unprepared to quickly scale-up their operation as per the rise in the requirement of their clients. An optimum size has, as a result, become a key selling point for the services providers.



The problem of lack of adequate scalability has been addressed by an expansion strategy involving mergers and acquisitions. As a result, 2005 saw number of mergers in the small and middle outsourcing companies.