With a strong surge in demand for IT services from abroad, Indian tech companies are going for a recruitment spree after a long dry spell. Most of the large IT companies like Infosys, Satyam are likely to significantly increase recruitment of fresh engineers
in the coming months.

Companies are recuriting new personnel following increased business due to strong client additions, US recovery and rising offshore IT outsourcing. It is expected that most domestic IT companies should deliver over 30% topline growth in FY05.

Also the increased proportion of freshers is likely help these companies control overall wage inflation and compete with their global counterparts. There is a rise in salary for the employees of these companies.

According sources, most companies have affected a 10-15% salary increase for offshore employees and 3-5% for onsite employees. Infosys had provided for about $23 million in FY04 towards performance bonus, which is a part of salary increase in FY05.

There is no shortage of skills at junior levels. But, strong volume growth and aggressive hiring by MNC IT companies would mean higher salary inflation at middle management levels. Companies are now trying to curtail wage inflation by higher intake of freshers.

Apart from this, Indian IT companies are known for their ability to train fresh engineers and quickly make them billable. IT companies had resorted to hiring laterals over the past two years due to relatively easy availability of experienced skills and slowdown in IT services.

What is heartening is that after a tough spell, most companies are finding that bill rates have stabilissed. However, a significant increase is unlikely in the near term due to intense competition. Some companies expect a marginal increase in average realization due to higher proportion of value added services.

There is also a strong demand from sectors like telecom for IT services. Nasscom expects IT services and BPO exports to grow at 30-32% in FY05.

There is increased competition from MNC IT companies, which are aggressively setting up offshore development facilities.

According anlaysts with Enam Securities, strengthening of US dollar against Indian rupee will help IT companies in a big way as it would restrict margin decline in Q1.

Indian IT services companies are leveraging their existing (IT services) clients for winning BPO business. It is expected that BPO revenues to become sizeable for most Indian IT companies by next year.

While non-voice BPO services are growing at a higher pace, voice base BPO services (75-80% of current BPO exports) will continue to be large portion of BPO exports in the medium term.

Employee attrition is a key concern for most voice based BPO firms.