A list of the top forex earning companies in India shows IT companies as the main contributors.

This is not surprising because Gartner, in July, pegged India's potential at $13.8 billion in forex revenue within four years from back-office operations alone.

Gartner said during 2002-03, India's revenues from offshore business process outsourcing would grow from slightly under $1 billion to $1.2 billion.

This will represent 66 per cent of the global offshore market where jobs are done outside the clients' region, Gartner said.

So, should one view export-oriented companies differently? Yes, feel analysts.

They say that it is not just the outsourcing opportunity, it is the sheer size of operations that gives export-oriented companies the edge.

"There are a gamut of reasons why exports make that much of a difference," says Shailesh Raj Bhan of Emkay Securities.

"The size of the companies' operations gets affected by exports. India's GDP forms just about 1-2 per cent of the global GDP and the purchasing power of Indian customers is not as much as that of their global counterparts. Companies may get a Rs 100 crore (Rs 1 billion) opportunity in India but the opportunity may be 10 times higher in the international markets," Bhan says.

The boom in IT services and BPO has also accelerated firms' export earnings.

Among IT companies, analysts bet on top bellwethers to perform well. Other favourites include E-serve, Mphasis BFL, HCL Tech and i-flex. Not to be left out are the IT training majors NIIT and SSI which also figure among the top forex grossers.

However, analysts say income from training is marginal at present for NIIT and SSI while a major part of their forex income comes from IT services.

They are, however, optimistic about the concrete plans undertaken by NIIT on the training front and expect it to start contributing significantly to the forex income going forward.

Another crucial factor is the emergence of global practices in the Indian scenario. Indian companies have also started benchmarking themselves against their global peers.

About five years ago the scenario was different economically as the cost structures were very high.

However, the rationalisation in cost structures undertaken by a lot of Indian companies, along with improvements in infrastructure, has placed them in an enviable position where competitiveness is concerned.

The export success story also encompasses sectors like pharma, auto and auto ancillaries, engineering services, steel and chemicals.

The pharma sector is a remarkable success story. While medicines may be retailed at around 25-50 paise per tablet in India, in the US and Europe, no tablet is sold for less than half a dollar.

Pharma analysts are upbeat about the sector's export prospects. Says Prashant Nair of Pranav Securities, "The export scenario in the pharma sector looks good. The outsourcing angle is applicable here, too. Big companies can make it on their own while smaller ones may supply basic raw material and bulk drugs to global majors."

Analysts say that exports would remain the main growth driver for the industry.

They also feel that companies have been building up their capacities and putting their infrastructure in place for quite some time but this has caught the public eye only recently.

The potential to make low-cost products of comparable quality in large quantities augurs well for domestic pharma companies.

Regulated markets account for the bulk of exports, and this trend would continue. These markets are also a lot more profitable.

Hence, the sector's profitability has also surged. Cash flows have been used to repay debt while substantial investments have been made in adding further manufacturing capacities and research infrastructure.

According to International Medical Statistics, around 50 per cent of the pharmaceutical majors worldwide have moved towards outsourcing R&D and manufacturing through long-term strategic alliances while around 10 per cent of them outsource moderately.

Emerging growth avenues like outsourcing opportunities in the manufacturing and R&D value chain, product-licensing arrangements and generic exports to the regulated markets of the US and Europe are expected to lend considerable diversity to the business profiles of leading Indian pharmaceutical majors.

Analysts feel that Ranbaxy would be a major winner along with Dr Reddy's.

Others like Cipla, Sun Pharma and Wockhardt are also well placed. Among the smaller companies, Matrix Labs, Aurobindo Pharma, Lupin Labs and Nicholas Piramal are the favourites.

The auto and auto ancillary industries play on different metrics. To be successful, these companies have to be successful on the domestic front.

"The auto sector is ultimately a volume-driven business. Indian auto manufacturers are at an advantage as far as development costs are concerned. However, manufacturing costs are essentially a function of volumes," says an analyst with a leading domestic brokerage.

"Going forward, the barriers across countries will come down. In fact, the entry of foreign majors into India has actually forced Indian majors to look beyond the domestic markets," he says. Analysts say that outsourcing orders have been pouring in from the US and Europe.

They say estimated export earnings among Indian engineering and auto components companies was around $800 million in 2002-03 against $578 million in 2001-02.

A number of global manufacturers like Ford, GM, Fiat, Volvo and Caterpillar have developed ancillary sourcing strategies for India in an attempt to improve profitability by benefiting from lower manufacturing costs.

Analysts see potential in players like Tata Motors, Mahindra and Bajaj Auto while TVS has also got there. The first two are expected to see benefits of the Indica and the Scorpio going global.

In fact, Tata Motors expects to sell about 100,000 Indicas globally in the next five years. Bajaj has been exporting three- wheelers to SAARC and African countries.

Among auto-ancillary companies, analysts see potential in established players like Bharat Forge and Sundaram Fasteners. Sundaram Fasteners gets 40 per cent to 50 per cent of its exports from supplies to GM plants.

The engineering services sector is also looked upon benignly by analysts. "There are huge outsourcing possibilities in the engineering services sector," says Urmik Chhaya of Karvy Securities.

"The sector has also benefited from international regulations like the one which asks transformers to be taken back and scrapped by suppliers. International players would find it very difficult to match the cost-benefit that the Indian players provide."

Analysts say players like L&T, Bhel, ABB and Crompton, which are their top picks from the sector, have looked outside India in the last two years and have been doing very well.

The case with the steel industry is a tad different. The industry was facing problems of oversupply and low prices due to unrealistic demand structures and excess capacity. The dismantling of the erstwhile USSR added to both demand and supply.

However, opening up of the Chinese market was a boon to the sector with demand coming in because of the construction boom and the Olympics.

Demand for flat products also increased due to increasing production of white goods for exports. So the export window for Indian producers like Tata Steel and SAIL got wider from 10-12 per cent of overall production to 16 per cent.

China accounts for 27 per cent of the global steel consumption. Japan and the US are also on the recovery track. Analysts say exports are not yet a driving force for the large players.

However, at present, the best picks in the sector are Tisco and SAIL. Among aluminium producers, Nalco, whose exports account for 52 per cent of revenues, is the top pick.

While outsourcing opportunity is a major positive for IT, pharma, auto and engineering services sectors, there is the spectre of rupee appreciation that could eat into companies' earnings.

Most companies in these sectors have taken de-risking options like forward covers, the impact of which is likely to be minimal.

Says Sameer Narayan of Enam, "The impact of the rupee appreciation would be minuscule on most pharma companies as the cost of hedging would be a small component of sales."