Indian IT services giant Wipro has become the latest offshore service provider to bolster its European presence, confirming it plans to recruit 500 more UK staff.

The move – which is part of a wider plan to recruit 14,000 entry level staff over the next year – will see Wipro add more staff at its Reading headquarters and also open several new sites, including one in Birmingham.

Kees Ten Nijenhuis, head of Europe at Wipro, said that the recent expansion of the company's services portfolio meant there was now a need for more local UK-based staff. "We are climbing the value chain and that means we need staff with local domain skills to support our customers," he explained.

The move is likely to result in a small increase in the cost of Wipro services, according to Nijenhuis, but he insisted any increase "would not be very noticeable".

"It is clear that as we expand in the UK we have to pay in pounds not rupees, " he said. "But if you have one person in the UK and 10 in India then any increase in price will be minimal."

The announcement came as Indian IT trade association Nasscom revealed the Indian IT industry is set to expand by almost a third during the current financial year to over $31bn. The organisation said that its latest Strategic review for 2007, which will be formally released next month, confirmed that the industry has now grown tenfold in the last decade and is on track to export $60bn of IT software and services by 2010.

The review also found that India-based service providers are expanding the portfolio of services available to western customers to include increasingly sophisticated services, such as business process outsourcing. Ramalinga Raju, chairman of Nasscom and IT services firm Satyam Computer Services, said that Indian IT companies were now "perfectly poised" to tap new opportunities in the offshoring market and increasingly develop their own intellectual property.

However, the review also warned that "much higher government investment in education, major education reform and better compensation and research grants for teachers/researchers" are all needed in the long term to provide the large skilled workforce required to underpin the move towards higher value services.