The US slowdown stands to benefit the estimated $8 billion Indian business process outsourcing industry, at least in the short term

US companies, hoping to save money during the recessionary phase, are likely to increase outsourcing of information technology services. On the business side, too, outsourcing is still lucrative thanks to the hefty cost savings as employee cost accounts for around 40 per cent of their operating costs.

India is the world's leading offshore provider destination according to the latest annual survey by global management consulting firm A.T. Kearney. India, closely followed by China, continues to lead by a wide margin, with declines in cost advantage offset by further improvements in talent supply and business environment.

Even though wages in offshore locations for services, such as IT have started to rise, they will remain cheaper for the foreseeable future under the most aggressive projections of wage inflation and currency appreciation in developing countries

The labour cost changes are partly the result of accelerating wages and currency appreciation in offshore hotspots, as well as downward pressure on wages in impacted sectors in developed countries. Though the relative cost advantage of the leading offshore destinations have declined almost universally, the scores for people skills and business environment has risen significantly.