Tough Q1 for Indian Outsourcing Firms

Posted by Ann All on July 18, 2007 at 5:20 pm

Several of India’s largest outsourcing providers weathered a tough first quarter, having been hit by an unfortunate blend of market forces, notably the dollar’s weakness against the rupee and continued wage inflation.

While the country’s IT services and software sector is on target to bring in revenues of $50 billion in 2007-08, according to Asia Times Online, net profits are being squeezed by the strong rupee — not a surprise, since the U.S. accounts for 60 percent of the Indian software sector’s revenues.

Infosys Technologies, for example, suffered a 3.5 percent dent in its operating margins due to a stronger rupee — which has appreciated 9 percent against the U.S. dollar since the beginning of 2007. Margins were also negatively affected by a 13 percent to 15 percent rise in offshore wages and a 5 percent to 6 percent increase in on-site salaries. All told, Infosys’ net profit was down 8.5 percent from the previous quarter.

Financial analysts expect a similarly lackluster performance from Wipro, reports Forbes.

http://www.itbusinessedge.com/blogs/sts/?p=180

It will be cheaper, and maybe the guy online will know what a "Trojan Horse" is and not try to tell me it is part of the software program that catches viruses! (Actual conversation with an Indian IT person for Intuit last week)

escape me concerning your conversation. :)