Leading global business intelligence and consultancy firms such as Forrester Research, Giga and McKinsey & Co have cited various reasons for the increase of offshore outsourcing to India. They predict that compared to other competing countries such as China, Ireland, Israel, and the Philippines, India will continue to dominate as the preferred offshore country for software development work.

According to Forrester Research, today, a larger number of companies worldwide are engaging offshore providers and their budgets too are growing rapidly. There is an increase from 12 percent of technology budgets in 2001 to 28 percent in 2003. According to a study conducted by Forrester in November, 2001, India's edge over other competing nations in the IT outsourcing business is based on the country's decade old experience in this area, fluency in the English language, supportive Government policies and infrastructure, and high quality offerings.

Besides MNCs, even SMEs and mid-size corporates are rushing to India to stake a claim to the IT outsourcing market. While a large number of companies are outsourcing their software development to Indian companies, others are establishing a presence in India and participating actively in the software export game. The MNC sector emerged as an important segment contributing Rs 9,855 crore of the total exports of Rs 35,600 crore in the year 2001-02, translating into 27% share of the total exports.