Infosys BPO says clients turning to India in recession

Faced with the need to cut costs, some of the clients of Indian outsourcer Infosys Technologies are expanding the number of business processes delivered from offshore locations, according to an executive of Infosys BPO.

"Companies are under pressure to cut costs, and are more receptive to new ideas that can help them do it," Ritesh Idnani, vice president and head of global sales and marketing at the firm's business process outsourcing (BPO) subsidiary., said in an interview Thursday.

The recession will in the long term help Indian outsourcers, as customers turn to low-cost suppliers to cut costs, according to analysts.

There will definitely be an increase in offshore outsourcing, said Siddharth Pai, a partner at outsourcing consultancy firm, Technology Partners International Inc (TPI) in Houston, Texas. "I am not sure it has started already," he added.

Some existing clients have increased the number of processes that they outsource to Infosys, and the subsidiary has also signed up new clients, according to Idnani.

A number of the company's recent wins have been in the media and entertainment segment, for example, where the revenue model is under pressure as advertising and circulation revenues are down, and there is severe cost pressure, he added.

Overall demand for outsourcing however continues to be challenging as many customers face declining revenues, and contraction in their business, Idnani said.

Indian outsourcers may however be hit by moves in the U.S. to protect jobs. US President Barack Obama said earlier this week to a joint session of Congress that there will be no tax breaks for U.S. companies that ship jobs abroad.

More details are required to understand Obama's statement, Idnani said. Outsourcing has helped make the U.S. economy competitive, and created more jobs there, he added, adopting a line common among other outsourcers in India.

In the quarter ended December 31, Infosys BPO had US$67 million in revenue. This business has about 17,000 staff. The company will rely on a mix of increased productivity of staff, redeployment of current staff, and new hires where required, said Idnani who did not comment on whether the company was adding more staff in this quarter.

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