Employees at the Wipro Spectramind call center which services customers of a U.S.-based computer manufacturer and an Internet service provider in Britain. An estimated 300,000 people work in India’s booming outsourcing industry, which is set to grow 40 percent in 2005. (Photo: AFP)

Together with a robust economic expansion that placed India among the fastest growing economies in the world, the country’s booming outsourcing sector grabbed the global headlines for the bulk of 2004 because of the backlash over loss of domestic jobs to overseas markets, mainly from the United States and Europe.

But as the fourth year of the new millennium logs out, the country’s information and communications technology (ICT) industry is riding on the hope that the New Year will bring in more cheer and less gloom as technology spends both within and outside would increase rapidly with a revival of the global economy.

The simmering protest in the West since last year against the shipping of tech jobs to low cost economies like India got accentuated in 2004 as campaigning for the U.S. presidential election picked up heat.

With George W. Bush, who was seen as less opposed to outsourcing of jobs compared with his opponent John Kerry, winning a re-election and the debate seemingly on the waning path, Indian companies see themselves reaping the benefits of larger inflows of outsourcing contracts.

The icing on the cake is a study by global research firm Gartner, which says the spending on ICT by Indian companies is likely to increase by over 16 percent in the coming year to $22.88 billion.

Outsourcing apart, 2004 also triggered what could eventually be heralded as the year that witnessed the globalization of India Inc., as it went for a spate of big-ticket acquisitions overseas.

From diversified businesses and pharmaceutical majors to technology companies and infrastructure conglomerates, all were caught by today’s mantra of reaching global scales, sending them scouting overseas for potential takeovers. This time the acquisition drive is not restricted to traditional markets like the U.S. and Britain, but to diverse places such as Australia, Romania, Germany, Angola, the Philippines, South Korea and Bosnia.

According to some studies, Indian companies had struck 28 buyout deals in overseas markets for an investment of $209 million in 2002. But in the first six months of 2004 alone, a total of 24 deals worth $846 million were finalized.

The statistics exclude some major buyouts by the Tatas and the Reliance group, as also several large buyouts, the monetary details of which were not divulged because of non-disclosure agreements.

“Most of the Indian companies are now looking for an international presence in a major way after having established a domestic presence,” said noted corporate sector analyst D.H. Pai Panandikar.

“Indian companies were sitting on a huge cash pile for sometime but few firms dared to buy firms overseas. All that has changed for the better and corporate India is finding it the most appropriate time to expand their reach overseas.”

Even the stork markets –– which took a tumble after a coalition led by Bharatiya Janata Party was voted out in May and another formed by Congress Party was sworn in –– has been on a roll for the past one month, peaking to new highs.

The 30-share sensitive index of the 128-year-old Bombay Stock Exchange –– often called the barometer for the country’s equity market –– has shot up by over 10 percent since December last year to its highest-ever level of over 6,400 points.

For years derided for its casino-like trading and flip-flop regulations, Indian stock markets gained credence as a maturing trading place and analysts forecast a further strengthening of its position in the coming year.

A major endorsement for that came from the $170-billion pension fund California Public Employees’ Retirement System, known as CalPERS, decided to enter the Indian equities trading ring.

“The year 2004 will mainly be remembered for maturing of India’s market and its ability to perform despite some mid-term corrections,” said Deepak Shah, an equity market analyst with Pranav Securities, a leading brokerage firm.

“The year witnessed it all –– a general election, high inflation, and spiralling crude oil prices. Yet, the market remained focussed on the broad fundamentals and continued its march on the growth path,” Shah added.

Worries over a slowdown in the Indian economy –– predicted to become the third largest globally by 2050 by some think tanks –– began from the beginning of the year as crude prices began to test new highs in the overseas markets.

The situation was exacerbated by erratic monsoons, which led to doubts over the farm sector being able to sustain a four-percent-plus expansion, considered an imperative for the economy to grow at the targeted seven-eight percent.

This did take a toll as the growth rate fell from 8.2 percent for the first half of the previous fiscal year to 7.4 percent for the first quarter of 2004-05 with predictions of eventually settling at around six percent towards the end of the fiscal year.

Yet, the neither the government, nor the industry, is overtly worried.

“Even at a six percent growth in gross domestic product, India will remain one of the fastest growing economies in the world,” said Finance Minister P. Chidambaram, after a presenting review document on the state of the nation’s performance in December.

At a more micro level, the corporate sector also witnessed some battles of inheritance in two of India’s leading business houses –– the M.P. Birla Group and legendary industrialist Dhirubhai Ambani’s Reliance empire.

The Birlas said they were surprised that noted Priyamvada Birla, the widow of the late chairman M.P. Birla, had named noted chartered accountant and their trusted aide R.S. Lodha as inheritor. The matter is being decided in courts.

In the case of Reliance, while older son of the industrialist Mukesh claimed that the ownership issue had been settled during his father’s lifetime, the younger sibling wanted to know in which manner the matter was settled.

Yet, in what points towards professionalism in India’s family-managed corporate houses, analysts say the battles over ownership have had little impact on the working of the industrial groups.

India’s economic story also became a major talking point at major multilateral forums, notably the European summit in The Hague and the summit between India and the Association of Southeast Asian Nations in Vientiane in Laos.

At both these events, attended by Prime Minister Manmohan Singh, global leaders lauded India’s growing clout in the

global arena –– fuelled mainly by economic performance –– expressed interest in engaging better with the country of over a billion people.

With the government now firmly in saddle, expectations are high on the country accelerating the pace of its 13-year economic reforms program, with an added focus on infrastructure, to sustain the pace of growth set over the past few years.