Shares in export-driven Indian software services companies are trading near their peaks on expectations for rising outsourcing demand as companies and governments around the world look to cut costs.
Risks to the sector come from rising wages, uncertainties linked to the debt problems in Europe and wide currency swings.
Last week, Tata Consultancy Services (TCS), the country’s top outsourcer, posted a 21% rise in quarterly profit and said it was seeing strong demand.
The result was in sharp contrast to Infosys Technologies, seen as a trendsetter for India’s USD 60 billion IT-services industry, that reported a rare drop in quarterly profit.
Analysts are betting troubled and recovering economies will be under pressure to get many services such as accounting, healthcare and billing done elsewhere to cut costs at home.
“As companies get careful on their costs, demand for outsourcing is only going to get better,” said Shashi Bhusan, research analyst at brokerage Prabhudas Lilladher.
“It seems the worst is behind us in Europe. There could be sporadic incidents, but there is no big threat to order flow from the continent,” said Bhusan, who has a buy rating on TCS and Infosys and an accumulate rating on Wipro.
Source:-http://www.moneycontrol.com/news/market-outlook/it-must-haves-for-your-portfolio-postq1-nos_471257.html
