The ongoing global financial crisis
has all the makings of an epoch
defining experience. It has virtually reached every country on the
planet and jolted all the major economies such as the US, UK, Japan, Germany,
etc., and India is no exception. The winds of recession are sweeping across India
too, making it the hardest hit Asian economy. India, which was dubbed
as best outsourcer of IT and related services until recently, is now
going through a rough patch, thanks to the downturn in worldwide economy,
increasing protectionism, Satyam's scandal and the terrorist attacks
in Mumbai. Most of the companies are at present confronting issues like
cost-cuttings, venture call backs, and project terminations, etc.
Signs of slowdown have begun to show off since early 2009, with
the prices of shares of IT companies, such as TCS, Patni, HCL and others, moving
southward. In response to the falling sales, most of the IT companies
have been reviewing their projects, business plans, and costs. Since 2008, most
of the US IT companies have been pulling back their investments from India
and other traditional outsourcing destinations in an attempt to weather this
economic storm. In the last decade, the contribution of IT outsourcing to Indian exports
and GDP was immense, i.e., about 25% and 5.8% respectively. While reporting
a 30% growth rate every year, Indian outsourcing sector drew more than
60% of its business from the US. All the major contracts and consolidations
were from the western economies. Although, the industry, as a whole, is
slowing down, the market still remains positive. Nasscom, the apex body of the
Indian IT industry, is quite optimistic about the growth of IT exports in
2009 and predicts that there will be an increase in the revenues by 17%,
amounting to $47 bn in the first quarter of 2009. |
