Infosys, Tata and Wipro are among the Indian companies celebrating the news that the Indian government has finally decided to extend a tax holiday scheme, which has benefited the growth of the local outsourcing market, by a year. The expiry of the tax holiday for Indian outsourcers based in technology parks has been extended until March 2010 from March 2009.

The original expiry date could have seen corporate tax rates of 12% and upwards rise to as high as 22%.

One of the major factors behind the Indian IT sourcing phenomenon has been the development of Software Technology Parks of India (STPI), which began in in 1991, and saw designated companies receiving a decade's worth of income tax exemption. Recently, debate has raged as to whether the country can afford not to tax some of the most successful multi-billion dollar enterprises doing business in its cities.

"We are very happy with the announcement," said Som Mittal, president of leading IT lobby group, NASSCOM. The relief is twofold: the Indian Government has been anxious that the country’s national champions may themselves up sticks, and take their business out of India to alternative sourcing locations.

• Indian nerves have certainly been frayed this week. Wipro was hit by rumours of a mass exodus of senior executives in the wake of news that P R Chandrasekar, president, Americas and Europe, had resigned.