Tech outsourcing companies to outperform

MUMBAI: JP Morgan Stanley Dean Witter said technology services outsourcing

companies will outperform the technology sector, particularly in times of

economic slowdown. Infosys Technologies and Satyam Computer Services figure in

the brokerage’s list of top tech service providers.

"Our analysis of the past cycle indicates that outsourcing prospers

during periods of slowdown. The growth differential between outsourcing

providers and the rest of the industry is likely to widen," it said in a

report earlier this month.

This was because there was an irreversible and accelerating trend for

companies to go for outsourcing in a bid to focus on core competencies and for

other reasons. Asian IT outsourcing providers such as Wipro Ltd. and Infosys,

have an even stronger case, mainly because of a huge cost advantage over their

Western counterparts.

Morgan said that outsourcing of IT services to Asia accounted for just about

one per cent of the global IT services market. "Thus a 0.25 per cent

increase in the outsourcing proportion could more than make up for a slowdown in

IT spending growth from about 10 per cent a year to negligible growth," it

said.

(C) Reuters Limited 2001.