In the world, while India is undisputed the current top outsourcing destination, it is an appreciating rupee, increasing labor costs and a higher attrition levels are now weighing heavily on outsourcers with their businesses in India. The country is already falling behind in terms of call center outsourcing with the emergence of the Philippines at the forefront and now with the release of Infosys quarterly results it has made the setbacks evident. The India’s number two software exporter and outsourcing services provider, Infosys released its third quarter results for FY2011. The company reported a 14.2 percent rise in net profit which fell behind analyst estimates coming in at a profit of 17.8 billion rupees below the 18.2 billion estimate in a Reuters poll. The company still raised its dollar sales growth forecast for FY2011 in the year ending March to 25.7 percent to 26.1 percent from the 24 percent to 25 percent forecast in October.
In the past quarters, there were high hopes for the company especially with the current uptick seen on spending for outsourcing technology services in the past quarters. The major Indian outsourcing companies in the technology sector were expected o show robust growth with the increase demand for their services with the companies ramping up hiring and raising wages to meet the demand. The Infosys results show while forecast were optimistic and demand is not waning at least for the short term. The appreciating rupee still presents a significant hurdle among outsourcers. The expectations for the other fellow outsourcers including as Tata Consultancy Services and Wipro will likely be affected as well.
With the currency gaining strength and costs rising, costs of outsourcing services will expectedly also rise, it does not help matters that competition is increasing among the other global outsourcing providers such as Accenture and IBM as brought about by the increase in demand and a steady economic recovery. The tide seems to be turning for India on the European front., Although the United Kingdom has proven to be a tough market to enter for India, local support in the form of the British council as well as Britain’s National Health Services Administration just might help Indian outsourcing companies to get their foot in the door and attract more business from the United Kingdom to create bigger competition for the other outsourcing companies in the region such as Logica and Capgemini. The tide may be turning, it did not help Indian outsourcing company, HCL Technologies to win a $600 million five year outsourcing contract with the European steelmaker ArcelorMittal who chose the Virginia based Computer.
REFERENCE:
http://www.blog.infinit-o.com/infosys-fails-meet-expectations-highlights-indias-setbacks-outsourcing-destination/
