Indian Services Firms Face Slower-Growth Future - InformationWeek

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Indian Services Firms Face Slower-Growth Future

By delivering cheap labor and quality work, IT services companies in India have enjoyed fast growth in recent years. Now those companies are starting to feel the impact of a lackluster U.S. economy, a global health crisis, and even geopolitical unrest.

Satyam Computer Services Ltd. last week reported net income for its fiscal year ended March 31 tripled to $79.8 million. But revenue grew just 10.8% to $459.2 million, compared with growth of 34% between 2001 and 2002. Besides cutbacks in IT spending, U.S. customers have canceled visits due to war in Iraq and the severe acute respiratory syndrome virus--even though India hasn't had an outbreak. Satyam execs say SARS could further hurt business unless it's stopped.

Still, the company says the number of customers spending more than $1 million jumped from 58 to 66 in its fourth quarter, and those spending more than $5 million increased from 16 to 20, which indicates broader and more mature customer relationships. "What is more gratifying is the fact that during the year, we've emerged as a full-service provider, including competing and winning against large global companies," chairman B. Ramalinga Raju says.

Indian company Infosys Technologies Ltd. noted earlier this month that clients and prospects have canceled visits due to SARS and the war. Hard to see the affect on revenue, though. It grew 55% for the quarter and 38% for its year ended March 31, to $753.8 million.

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