India's flagship outsourcing industry expects some pain from the latest global financial turmoil but insists it could emerge a winner with companies shifting more work to the country. The sector, an economic mainstay that generates $40 billion in annual export revenues, traditionally views bad times as offering potential as Western companies cut costs by moving work to cheaper destinations offshore.

Industry body Nasscom believes the trend will be the same this time, though it could take longer. "There will be a short-to-medium-term impact which we define as three to four quarters," Nasscom chief Som Mittal said. Some of the pain from the bankruptcy of Wall Street giant Lehman Brothers, the sale of Merrill Lynch and the US government's bailout of insurance giant AIG -- all ravaged by credit woes -- is already being felt.

IT companies are cutting hiring plans and share prices of India's IT companies are under pressure. But there's some positive fallout as Indian legal process outsourcing firms doing bankruptcy work report a rise in business. “Companies are seeking to outsource to India, where legal work costs a tenth of what US lawyers charge,” said Sirisha Gummaregula, chief operating officer of legal support firm Quislex.

“Over time, the financial crisis should lead to much stiffer controls that "will all be IT-and systems-driven," said Mittal. “This should lead to more business for India's "tech titans" like Infosys, Wipro and Tata Consultancy Services whose skilled, English-speaking, low-cost work force planted the nation on the global business map,” Mittal said.

"We have a fairly deep understanding of our customers' operations now. This would be the time to help partner them," he told reporters. Still, the latest financial crisis has come at a bad time for the sector. The US-led credit crunch, rising pay costs and currency fluctuations had already hit profits, along with competition from outsourcing rivals like Malaysia, the Philippines, Vietnam and Mexico.