Technology stocks we love

Finally, we came across three Indian companies that are all benefiting from the outsourcing trend among big businesses in the U.S..But rather than pick one, we think all three make sense as part of a diversified portfolio.

Like it or not, many U.S. companies are investing in what is called business process outsourcing -- or BPO services -- in an effort to bring costs down. That means that when you call a customer service number to talk about your credit card balance or for tech support when your computer's on the fritz, there's a good chance you are talking to someone in India. Infosys, Wipro and Satyam all provide outsourcing services to businesses.

Wipro is arguably the most global of the three, with locations in Canada, Mexico, almost every European country and practically every Asian country. Trip Chowdhry, an analyst of Global Equities Research, likes Wipro because of this geographic diversification.

Infosys, which specializes in software products, is the largest U.S.-listed exporter of software from India, according to a report published by Ashish R. Thadhani at Gilford Securities. But Infosys has the most exposure to the financial sector of the three, which makes it a bit riskier in the short term as struggling financial services companies may be hesitant to spend on new projects during this downturn.

Satyam, which lists Oracle as one of its top customers, has been able to win deals by offering outsourcing services at the lowest price, analysts said. So as more corporate customers fret about how much they are spending in these uncertain times, Satyam could benefit even more in the short-term.

But all three companies look like bargains. Infosys and Satyam each trade at 15 times 2008 calendar earnings estimates while Wipro trades at 17 times earnings estimates for this year. (All three companies have fiscal years ending in March.) Analysts expect average annual earnings growth rates of 20% for Satyam and Wipro. Infosys, despite short-term concerns about its reliance on banking customers, is expected to post average earnings increases of 25% a year for the next few years.



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