While India is undisputedly the current top outsourcing destination in the world, an appreciating rupee, increasing labor costs and higher attrition levels are now weighing heavily on outsourcers with their businesses in India. The country is already falling behind in terms of call center outsourcing with the emergence of the Philippines at the forefront, and now with the release of Infosys’ (NASDAQ:INFY) quarterly results, it has made these setbacks more evident.

Recent moves by the US government have made some outsourcers unsure of the future in outsourcing to the US, notably, outsourcing company Infosys, has been vocal about the Ohio outsourcing ban.

Numerous outsourcing companies released results following the end of the quarter, with Accenture (NYSE:ACN) leading the pack.  It was currency volatility, problems in Europe, and attrition which were some of the major issues that were raised with the release of results.  The general flavor in the outsourcing space has been that business in outsourcing is steadily on the rise with business process outsourcing and IT outsourcing coming into major play, with the big winners being Indian companies, Tata Consultancy Services Ltd (NSE:TCS), and HCL Technologies (NSE:HCLTECH), as well as company Xerox Inc (NYSE:XRX).

The United States Agency for International Affairs or USAID, in a controversial move, has decided to fund the development of Sri Lanka’s, as well as Armenia’s offshore outsourcing industry.

TCS (NSE:TCS) CEO N. Chandrasekaran sounded optimistic when he said during an interview that TCS had not seen an impact from the Europe debt crisis among its clients. Particularly since the company’s multi-million dollar UK outsourcing contract with PADA appears to have been in jeopardy for quite some time.

Expectations were high for the end of quarter results of India’s number two outsourcer, Infosys (NASDAQ:INFY). As the first of its peers to release quarterly results, the outsourcing company is responsible for setting the tone for India’s outsourcing sector. It was therefore a big disappointment when Infosys announced a 2.6% drop in profit for the period of April to June 2010.

IT outsourcing growth is on the rebound but it is unlikely that it will ever be the same again. After the big boom that the industry experienced a few years ago before the recession, analysts estimate that this is unlikely to happen again.