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Indian IT Business is likely to be numbed by Europe Financial Crisis.

With the Crisis in European Business Circuit which is likely to hit the Business of Indian IT Firms, thanks no such problem is faced from the US which contributes more than half of its business

Tata Consultancy Services, Infosys Technologies and Wipro Ltd face uncertainty on orders from Europe - the second-biggest market for the sector after the United States.

"There has been no major impact on volume growth due to the crisis," said Harit Shah, an analyst with brokerage Karvy Stock Broking. "It could have an impact going forward, especially due to the euro. We will have to watch for what the management has to say."

Indian software services firms are ramping up investments to grow their market share in Europe, which accounts for about a third of their revenue.

Research firm Forrester said in a report last week that Europe's volatile economic situation and uncertainty about corporate IT budgets would result in possible delays or cancellations of some outsourcing projects.

Analysts expect Infosys, which sets the tone for India's $ 60 billion outsourcing sector and counts BT Group and Goldman Sachs among its clients, to edge up its dollar revenue growth forecast for 2010/11 to 17-19 per cent from the 16-18 per cent estimated by the company in April.

Growing competition from IBM, Accenture and Hewlett-Packard also pose a risk for the industry, which manages complex computer networks and maintains technology operations for Fortune 500 customers.

Last month, Accenture posted better-than-expected results, indicating continued business momentum.Indian IT firms are boosting hiring and have raised salaries by 10 to 20 per cent on average to keep staff from being poached by global rivals on strong demand in outsourcing.

Brokerage Macquarie said profit margins at Infosys and Tata Consultancy could drop by 200 basis points and 250 basis points, respectively, in the June quarter due to the wage increases.

Shares in Infosys, valued at about billion, have risen 10.2 per cent this year and Tata Consultancy is up 3.3 per cent, versus the 5.6 per cent rise in the sector index and the main index's 2.1 per cent gain.

-Reuters Inputs

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