US slowdown wiping out the Indian native IT outsourcing infrastructure
Hrithik Ratnagar
May 26, 2008

The lower value of US Dollar and an anemic growth in the US economy is having a severe bad effect of the Indian IT industry. Indian native IT outsourcing infrastructure has lost its pricing power – the worst thing that happen to any sector of the economy. The stable Rupees against US Dollar does not help in making easy currency differential related profits. The rising wages and turnover makes it difficult to deliver quality products. On top of that lower demand and budget cuts across the board is making it difficult for Indian IT companies to make money.

These IT outsourcing companies will not have a rapid collapse. Like Microsoft, Oracle, SAP, and others it will start going down very slowly. There is no place for any company in this world that cannot innovate on a continual basis. That is why Apple is doing the best among the techs.

Satyam Computers services, an outsourcing body shop of India, said it is worried about the impending slowdown in the US. Sources tell us that other IT outsourcing outfits are in deeper trouble.

"The US market is worrisome. Any slowdown there would impact us directly. The banking and financial services industry have been impacted and it is in deterioration mode," Satyam Chief Financial Officer V Srinivas told reporters.

"We are adopting a wait and watch approach towards the US market," he said.

The biggest problem for Indian IT and call center outsourcing companies is the coming Presidential election in November. If Obama wins, he will make sure Indian companies play fair game in ‘stealing US jobs’ by using manipulated currencies. The political picture in US will not allow Indian so called body shoppers and call center outfits to steal US jobs any more. That can be the nail in the coffin for the native Indian outsourcing companies.

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