Financial Markets in Turmoil, how will it affect India Outsourcing?

Published on October 6, 2008 By shreyam In Business

The news in the US is bleak, bank after bank is in trouble, an $800B bailout package is awaiting approval. And everyone is feeling the crunch in the US.

And so are the companies in India, feeling the crunch that is. Tata Consultancy has begun making changes to save money. The changes include simple things like restricted travel and surprisingly strange changes like potentially removing Microsoft office from PC’s, according to this report. Other companies are seeing their revenues shrink. People are worried and rightly so.

But experts differ in their opinion (no surprise there) of whether outsourcing will grow or shrink after the crisis passes.

My two cents?

I think that the outsourcing market will see a short slowdown until the first quarter of next year. Then it will see an increase until either legislation changes are made (assuming Obama comes into office) whereby companies are rewarded for keeping jobs in the US or rate hikes in India makes outsourcing not as viable for US companies.

However if McCain comes into office (which seems unlikely right now), offshoring of jobs will continue and even grow, until rate hikes make it impossible for US companies to outsource.

Either way, times are going to be tough until the first quarter of next year, when companies and countries await the results of the elections.

And that means that the ones that survive will be those who have enough cash flow to ride out the storm. Tata, Satyam, Wipro, Infosys won’t have to worry but the smaller players may begin closing show faster than you can say boo!

Comments

CharlesCS

on Oct 06, 2008

Well, sh_t happens. No one likes it and does not want it to happen, but it does. That saying "all good things must come to an end" is basically derived of the concept of greed. Greed will always eventually mess things up. In this case, greed from the banks, from politicians, from Wall Street and from the people. But we'll be alright. I'm sure of it, it will take some time but we will be alright.

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