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Karnataka sees 60% IT export growth

India's computer industry is booming despite a slowdown in IT sales worldwide, and its technology capital Bangalore is leading the charge.

Karnataka, whose capital is Bangalore, aims to boost exports of software and allied services by 60 per cent this fiscal year, twice the expected Indian growth rate of 30 per cent.

Vivek Kulkarni, information technology secretary in the Karnataka state government, told Reuters that most of the fresh impetus to growth was coming from US technology firms, which are rapidly moving back-office functions to India amid a sectoral slowdown overseas.

These are companies, which have tested the Indian waters as customers of software provided by armies of relatively low-paid programmers. Now, they are beginning to outsource activities like accounting and bill processing.

"While the traditional software exports continues to grow, we are seeing big investments coming into IT-enabled services," Kulkarni said in an interview late on Tuesday.

Bangalore, India's "Silicon Valley," houses software centres for more than 1,000 high-tech companies including computer giant IBM, chip maker Texas Instruments and top Chinese telecoms gear maker Huawei Technologies.

These have been joined lately by companies from other sectors including media titan AOL Time-Warner Inc, the world's second-largest reinsurer Swiss Re and banking group HSBC.

Bangalore reported exports of about $2.0 billion in the year to March, up 33 per cent from the previous year, accounting for more than 95 per cent of the state's IT exports.

Kulkarni said AOL Time-Warner recently leased six floors of office space for back-office work at International Tech Park, Bangalore's nifty showcase for the tech sector.

DOMESTIC GIANTS DIVERSIFY

Kulkarni said Bangalore continues to attract one new foreign technology firm every week, a trend seen over the last two years.

At the same time, domestic software giants such as Wipro and Infosys Technologies have added back-office work, leveraging their existing sales engine and contacts.

Business process outsourcing, an omnibus expression for an array of back-office services, is delivered remotely through high-speed telecoms links, which are increasingly cheaper.

Building on India's proven software skills, foreign firms are also flocking to set up centres to process financial claims, payroll data and build customer support desks. Commerce and English language graduates are in great demand.

While the technology sector has been hit worldwide, accompanying cost-cuttting measures are a boon for Bangalore.

"The majority of the companies in US are under cost pressure and that's why we expect them to continue to move into India, which offers them a ready-made talent pool," Kulkarni said.

"Cost obviously is the driving force but that doesn't mean that quality is being compromised," he said.

In Bangalore, software engineers can be hired for about $200 per month, nearly one-tenth of what it costs in the United States. The city of about 5.5 million people is home to over 120,000 IT workers.

Bangalore, named by the United Nations last year among a handful of world-class technology hubs, accounted for a fourth of India's $7.5 billion IT exports in the year to March.

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