India's software exports grew 29% in 2001-2002. Growth in the offshore services was 70% while onshore exports grew by 10%. In terms of volume of work, the industry grew at a stunning 60% in what was supposed to be a recessionary year. Similar growth outlook is being projected for the year 2002-2003. One of India's closes competitors - Israel - in the same period has recorded a slump of 10% in its growth rate.

Despite the global economic slowdown, interest in offshore development is accelerating rapidly and the offshore advantage is becoming apparent and widely known. The demand drivers for outsourcing include economic condition, speed, time-to-market, cost, quality, readily available resources, increased awareness and success stories. The improvement in telecom and power infrastructure in the past decade and the segregation of politics and economy has eased most of the basic worries of the customers.

A new report from Forrester confirms India's pre-eminence in the offshore development space and traces the reasons for the increasing demand for offshore services from India. We present excerpts:

DEMAND FOR OFFSHORE SERVICES FROM INDIA ACCELERATES
Low-cost labor and high levels of satisfaction fuel the rapid expansion of offshore services. Based on an evaluation of current offshore buying patterns and expectations, Forrester projects that worldwide demand for offshore technology labor would reach almost 1,100,000 people by 2005 if unconstrained. What's driving the surge in demand?

• A tripling of offshore budgets at very large companies. While the typical firm with more than 5,000 employees spends almost $8 million on offshore service providers today, it is estimated that the average budget will reach $26 million by 2005. One-third of software expenditures will flow to offshore providers like Infosys Technologies and IBM Global Services in India.
• New middle-market customers. As early-adopting multinationals like General Electric tout savings in the hundreds of millions of dollars, a new tier of firms will look offshore to trim IT costs. By 2005, the middle market - firms with 1,000 to 5,000 employees - will account for 10% of US demand, up from just 1% in 2001.
• Deeper penetration in Europe and Japan. Today, almost two-thirds of India's software exports go to the United States. But providers like Wipro are diversifying their revenue streams through business development efforts in countries like Japan and the UK. As providers deepen operations and brand awareness in these markets, European and Japanese companies will look for more offshore labor -- and account for 34% of demand in 2005, compared to 28% today.

Indian software companies have achieved the unique distinction of providing efficient software solutions with cost and quality advantage, using state-of-the-art technologies, having the capacity to handle large projects and, above all, the ability to execute timely deliveries. The world is coming to India's doorsteps.

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