India's IT export services are worth $9.5 billion per year, which is more than the combined software exports of the next five leading countries-Canada, Ireland, Israel, the Philippines and South Africa. Those numbers are echoed in terms of numbers of engineers actively employed in software exports.

While China is considered an up-and-coming destination for outsourcing, its threat to India is still some way off, because India produces almost six times as many new engineering graduates as China each year, according to Nasscom.

The organization's report compares the current main destinations for offshoring IT services on the basis of eight parameters, including the current size of each country's software exports industry, its available number of engineers, the characteristics of its labor force, any attendant social and geopolitical risks, and the advantages and disadvantages of its infrastructure and location. India's large population, well-established educational system and cultural focus on attaining advanced degrees indicate that few other countries, if any, will pose a threat when it comes to availability of engineers now and in the near future, according to Nasscom.

The report is expected to embolden the industry here. India annually sees 290,000 new engineering graduates join the existing engineering pool of 2.1 million each year. In China, by contrast, only 50,000 technically qualified graduates annually join the existing engineering pool of 247,000, Nasscom reports.

Russia, another up-and-comer, offers a talented but small labor pool, having just around 20,000 IT professionals. The Philippines turns out about 15,000 technology graduates annually, while Canada's labor pool is small and may see a shortage of engineers in the coming years.

India is also favorable in terms of employee costs. While that factor was not very important in the 1990s, it rose in significance during the downturn.

Ironically, India's successes in IT have raised concerns in recent months that some nations, notably the United States, may restrict outsourcing to other countries as the outcry against the practice rises during a U.S. presidential-election year.

The hourly rates charged by Indian software firms fell precipitously in the past few years, although prices appear to have stabilized since mid-2003, Nasscom said. During 2001 and 2002 hourly rates were halved in some cases. Competing firms here sometimes undercut one another.

One category where India did not score well was infrastructure: Nasscom rated it as "average," while giving "good" ratings for this category to the five other ranking software export nations. Frequent power outages and poor public transportation were among the causes for the rating.

Worrisome geopolitical factors have waned, given India's recent peace moves with Pakistan, but other risks-such as potential U.S. restrictions on outsourcing-are imponderables, the report said. For example, a strict U.S. policy lowering visa and work permit numbers could have a chilling effect in the long run. India's main advantages, Nasscom said, are its software development and project-management experience, highly qualified and abundant work force, and English-language skills.