The Indian software and services export sector is clearly moving towards a situation where bigger is better, with the four largest companies — Tata Consulting Services, Wipro, Infosys Technologies and Satyam Computer Services — accounting for nearly 30 per cent of the estimated $23.4 billion in export revenues in 2005-06 projected by Nasscom. The four companies together accounted for revenues Rs 35,617 crores in 2005-06, with Satyam Computer Services joining the exclusive billion dollar club, employing over 1.75 lakh people.

Industry experts say that as the Indian offshoring story continues and picks up steam, only a few large companies would be able to sustain their operations. "Bigger is definitely better in the Indian software services sector because there is no differentiation in services among Indian companies. In such a situation, customers will general go with the larger players," says Sudin Apte, country manager, India, for Forrester Research, Inc., an independent technology and market research company.

"This has been borne out by the performance of the large Indian companies which reported robust, double-digit growth in revenues and profits, while the mid-sized companies have posted single-digit or flat growth in 2005-06," Mr Apte said.

"The increasing size of the Indian companies like TCS and Infosys and Satyam was one of the reasons why they were able to win multi-year and multi-million dollar contracts from ABN Amro and Hewlett-Packard in association with other companies," Mr Apte said. Mr Apte’s view was echoed by Ram Mynampati, president and wholetime director of Satyam Computer Services, which has a balance-sheet size of Rs 4,200 crores, including cash reserves of Rs 3,100 crores. "A large offshoring company has advantages, because the size of the offshore operations will be able to absorb a lot of opportunities," Mr Mynampati said.

Foreign banks operating in India appear to have enjoyed a phenomenal run in 2005 and outpaced their domestic counterparts in reducing the level of non-performing assets (NPA’s), both in gross and net terms, while the private sector banks came in second, according to a recent study by Assocham.

The foreign banks (after witnessing a continuous rise in NPAs for two consecutive years) had drastically slashed their gross NPAs by 32 per cent in 2004-05 as against a rise of four and two per cent in the years 2002-03 and 2003-04 respectively.

The private sector banks had also registered a decline in their NPAs by 30 per cent in 2004-05 as against a decline of 21 per cent in 2003-04, said the study.

In addition to gross NPAs, the foreign banks had shown a significant improvement in reducing their net NPAs by 38 per cent in 2004-05 (year-on-year basis) while the private sector banks had reduced their net NPAs by 18 per cent in 2004-05.

Assocham president Anil Agarwal said, "It goes to the credit of the banks that they have improved their asset quality despite aggressive growth in their advances, particularly in the retail sector."

Among the scheduled commercial banks (SCBs), the foreign banks again topped the list in providing the cushion of provisions against NPAs, constituting 63 per cent of gross NPAs. A significant improvement in recovery of the NPAs and a sharp increase in gross loans and advances for SCBs, led to a sharp decline in the gross NPAs to gross advances ratio.