Wednesday, September 28, 2005

Bangalore Outsourcing Revenue Increases, Growth Slows

Bangalore Outsourcing Revenue Increases

The Associated Press

BANGALORE, India -- India's technology hub Bangalore experienced a 20 percent growth to 90 billion rupees ($2.05 billion) in its software and back-office outsourcing exports in the April-September half-year period, an official said Wednesday.

Also, 57 foreign companies opened offices in the city and had invested a total of 9.2 billion rupees ($209 million) through Sept. 27, when the figures were calculated, B. V. Naidu, director of the federal government body Software Technology Parks of India told reporters.

"The momentum of outsourcing growth is the same as we witnessed last year and we expect it accelerate in the next two quarters," Naidu said. India's financial year starts in April.

Naidu expected full year revenues to be at least $8.7 billion, or 30 percent higher than the last year's figure of $6.7 billion.

Industry leaders had feared that Bangalore's outsourcing revenue growth may slow down due to the city's sagging infrastructure and resistance from U.S. labor groups. But the latest growth figures suggest there has been no decrease in Western outsourcing.

Western companies save costs by farming out software development, engineering design and back-office functions to India and other countries where wages are low and skilled workers are plentiful.

"I won't say our infrastructure problems have been sorted out, but we still have rich human resources and that ensures dynamic growth for us," Naidu said.

Many of the world's largest technology companies including Microsoft Corp., Intel Corp., Oracle Inc., and Google Inc., have their offices in Bangalore. But many complain that the city's potholed roads, congested traffic, frequent power shortage, inadequate public transport and a cramped airport threaten their growth.

Labor groups in the U.S. and Europe have protested the practice of outsourcing, claiming it leads to job losses. But such protests have eased in recent months.

India's revenue from Western outsourcing was $17.2 billion in the fiscal year ended March 2005. It expects a growth of at least 30 percent in the current year.


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