Good Times Ahead

Fiscal 2005 was much better than the corresponding fiscal and the projections

for the first quarter of the current year indicated even better volumes.

Leading from the front are the three companies of the Indian IT quartet, with

more than billion dollar revenues. While TCS achieved the milestone of being the

first Indian IT company to post revenues of $2 bn, Wipro and Infosys closely

followed suit. Good news is that it's not just IT biggies: mid-tier firms have

all joined the fray showing optimism on growth.

The year that was



Leveraging on the global delivery model, the year witnessed setting up and

expansion of the existing nearshore and onsite locations. Besides, the focus

changed from being just North America centric. While Europe's contribution to

the total revenues increased, revenues from countries like Japan also chipped in

well. This apart, revenues from domestic services picked up, though not heavily.

BFSI remained the strong contender in the vertical domain while telecom,

manufacturing, and retail-though contributing a smaller percentage-seemed to

be growing at a faster rate. TCS, which has a strong presence in the BFSI

vertical, generated 38.4% of the total revenues, while manufacturing and telecom

verticals contributed significantly generating 19.3% and 16.4%, respectively.

Satyam, with its fairly balanced line of businesses, reduced contribution

from manufacturing and insurance by 2.59% and 2.38% respectively, while

increasing its focus on retail, transportation, and telecom, infrastructure,

media, entertainment and semiconductors (TIMES) verticals reasonably.

Revenues from offshore and onsite locations also grew subsequently. Phaneesh

Murthy-led iGate recorded an increase of 9.9% from offshore practicing and a

decline of 7.3 % from onsite. Similarly, Infosys' contribution from onsite

locations diminished by 2.2% whereas from offshore locations, it increased from

68.4 % in 2004 to 70.61 % in 2005.

To cash in on the growing consulting space, Satyam Computer Services

announced that it would acquire Europe-based CitiSoft that would bring in

additional customer base and geographic reach, besides strengthening their focus

in the consulting space.

For Infosys, where majority of the business comes from development and

maintenance, offerings such as reengineering, package implementation, testing

and others did pretty well contributing 3.6%, 5.8% and 11.1% respectively for

the year 2004-05.

Muted triumph for BPOs



The recent BPO frauds in the financial space, though termed temporary

roadblocks, have raised many an eyebrow. However, fiscal 2005 was good.

Foreseeing business potential, software bellwether, Wipro, had decided to

merge the company's backoffice subsidiaries-Wipro BPO Solutions (formerly

Wipro Spectramind Services), Spectramind (Bermuda), and Spectramind (Mauritius)-to

further strengthen its focus. Nipuna, the sister-arm of Satyam, reported

revenues of $10 mn and is expecting to record $18 mn by the year ending March

31, 2006. Mphasis, BFL's BPO arm revenue was up by 32% to Rs 742.5 bn.

Market analyst Gartner, in its recent study, predicted that within the next

nine months, 70% of the top 15 Indian third-party BPO start-ups, excluding the

top five, will be merged, acquired or marginalized. While on the face of it,

this will help BPOs to specialize in their areas of expertise, to what extent it

will boost up customer base, thereby increasing revenues, for fiscal 2006

remains to be seen.

Sunitha Natti