Home demand boosts software giants

13 July 2009

MUMBAI: Indian software stocks rose in a volatile market at the end of last week on strong figures from one of the biggest software and outsourcing companies, Infosys Technologies.

Infosys announced an 18% leap in profits in the quarter to June which also helped Tata Consultancy Services and Wipro.

Indian software companies have grown massively in recent years through gaining outsourcing contracts from companies outside India, but they are now also beginning to profit from domestic Indian business, much of it in the mobiles sector.

While the industry racked up export earnings of $47.3bn (€40bn, £29bn) in the year ended March, an increase of 15.8% on the year before, the domestic outsourcing sector is estimated have grown from $13.2bn (€11.3, £8.1bn) to $24.3bn (€20.9bn, £14.9bn) in the last three years.

Tata, the industry leader, reckons it earns about 8% of its revenue from India while India accounts for a large chunk of the 20% of its total Wipro earns from emerging markets.

"The domestic market will never be an alternative for the revenue shortfall they might have from developed economies but it is definitely a capability boost as well as a nice hedge and a stable revenue earner for these companies," commented Milan Seth, a partner at Ernst and Young.

Data sourced from Financial Times, Bloomberg; additional content by WARC staff