The Hindu Business Line : `More US cos looking at India for offshoring'

THERE is a heightened sense of urgency among large US companies such as EDS, Cap Gemini and Accenture to do work out of India, according to Mr Phaneesh Murthy, CEO, iGate Global Solutions.

There is market pressure among leading players to set up a presence outside, and they are looking at India for technology. This is positive news for India in terms of employment and business for IT, he told newspersons.

The annual total IT budgets of the Fortune 1000/Global 2000 companies are $250-300 billion and they continue to increase their IT spend.

For instance, customers who are spending 6-7 per cent of the budget will spend 15-20 per cent in the next three to four years, he said.

According to Mr Murthy, those companies having first time offshoring experience are now looking again at offshoring from a more strategic point of view. Similarly, some of the companies not successful in offshoring in the first attempt are coming again with experience. A number of iGate's key wins in the last six months have happened because of this `second time offshorisation' wave, he said.

Talking about iGate, Mr Murthy said this year he expected the overall profitability to be better. "By March 2007, our goal is 40 per cent gross margin and 15 per cent EBIDTA (earnings before interest, depreciation, taxation and amortisation). We are currently at 30 per cent gross margin and 4-4.5 per cent EBIDTA," he said.

On margins pressure, Mr Murthy said that while the company was profitable in March quarter there were two concerns — rupee appreciation and the 13-per cent salary increase for 2005-06. These two would create a 4-5 per cent impact on margins, he said. iGate Global reported revenues of Rs 580 crore for 2004-05.

iGate plans to recruit 800-1,000 people in India in its Chennai, Hyderabad and Bangalore centres. Globally, the company employs more than 4,000 people, 70 per cent of them in India and the rest outside, he said.

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