Investment banks are trimming IT budgets faster than Sweeney Todd, so yet more roles could be on a passage to India.

On the face of it, Indian IT firms have felt the pinch of the credit crunch like everyone else. The bulk of their business comes from international investment banks, and squeezed budgets state-side have hit revenues.

Tata Consultancy Services, India’s biggest computer services company, has just posted its worst quarter-on-quarter profits since first listing in 2005.

But this could just be a short-term phenomenon.

Accompanying its results was a suggestion that Indian IT companies are adding more clients to their books this year. Based on this premise, Tata is hoping 2008 profits will rise by 20%.

What’s more, conscious of the fact that the IT sector is slowing, the Indian government has handed a $1bn tax break to help speed the migration of Western jobs.

IT specialist Pierre Audoin Consultants tells us banks are likely to outsource more technology roles during the current downturn as a “quick way to save money”.

Conscious of the skills shortage in the UK, Indian outsourcing firms have been aggressively targeting investment banks here and are looking to offer higher value services such as developing and tailoring new products to individual needs, rather than the typical business process outsourcing (BPO) activities.

What’s more, even the insurance market – a sector currently undergoing an IT renaissance – is increasingly shipping the bulk of the software development and coding roles out to India.

There are, of course, a couple of spanners in the works. Firstly, the supposed increasing threat to India’s outsourcing dominance from the likes of China, Morocco, Poland and Hungary.

And nay-sayers will point to spiralling salaries – expected to rise by 15.2% this year, according to consultants Hewitt. However, wages are still about a sixth of what banks would pay Western techies, so India remains a much cheaper option. And with IT budgets strained, you can bet your boss will bear this in mind.