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Friday, 26 July, 2002, 09:07 GMT 10:07 UK
Optimism returns to Indian IT firms
Software programmers at work at an Indian software company in Bangalore, India
India benefits from its large pool of skilled workers

After a difficult two-year period where the Indian IT sector bore the brunt of a global slowdown, there are encouraging signs of a recovery.

Software companies are posting positive results, the hardware sector is showing steady growth and there has been a sudden spurt of IT related jobs.

The growth is strongest for India's software companies, with increasing numbers of global multinationals outsourcing from India.

Although many are only undertaking pilot projects, this has still resulted in projects worth over $5 billion waiting to be distributed to Indian firms.

The best known of the Indian software firms, Infosys, has led the current upward trend in the sector.

Beating market expectations, it reported a 14% increase in net profits for the first quarter of the current year.

Perhaps a more telling statistic is the fact the company has 468 projects in hand - a strong sign that the future looks bright.

Political fears

A big factor has been receding threat of war between India and Pakistan over Kashmir.

Even as the economies of the west struggled to avoid recession, the India-Pakistan tensions evident over the last few months resulted in many multinationals becoming jittery over outsourcing IT projects to India.

This is at last beginning to change.

"With the war threat disappearing, more and more US and European companies are planning to outsource from India," said Anshuman Deb Burman, the director of a Jaipur based software company.

The Indian software trade association says that the Indian software services industry will be worth $12.3bn in the 2002-2003 financial year.

Additionally, IT services exports are expected to grow by 22% and IT enabled services exports are expected to grow by 65%.

Hopes for PCs

While the hardware sector had been undergoing a slump, it is also now projected to show healthy growth, aided by sales in smaller towns and cities.

The sector during 2001-02 had reported a drop of around 11% - but this year analysts are confident of a robust growth in sales.

And their optimism has been boosted as purchases of personal computers in smaller towns increased 106% in the past year.

According to the computer manufacturers' association, the Indian PC market is close to recovery, with the market projected to notch a 12% growth in 2002-03.

Hiring boom

With both software and hardware firms more bullish about future prospects many companies have now begun hiring again.

Offers that were deferred from last year are now being honoured, and 11,200 new jobs have been created.

Reliance Infocom plans to hire another 5,000 people, Infosys aims to recruit 1,000 in the July to September 2002 period alone, and Tata Consultancy Services has disclosed plans to hire about 3,000 software professionals in 2002.

"The demand for software professionals has seen a considerable upswing, and we have started to get fresh inquiries from companies for software professionals. The job market has suddenly turned for the better for the freshers," says Ravi Chaudhary, who runs a placement agency.

A recent report underlined the positive outlook on the Indian IT industry, predicting a 24% growth. This would make it one of the fastest growing IT economies in the world - a real turnaround for India's sunshine industry.

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