Slowdown, Schmodown, Say Indian Outsourcers

Ann All

The U.S. market for outsourcing has been soft most of this year, as I blogged in April, and in August andagain in October. Economic uncertainty is leading American companies to scale back their outsourcing initiatives, say some experts.


However, large Indian services providers like Wipro and Infosys seem more concerned about the rupee's rise against the U.S. dollar than about a general economic slowdown. Prompted by the strong rupee, along with rising wages in India and other market forces, they are working to broaden their global reach.


Top executives at both Wipro and Infosys indicate in a recent Business Standard article that their companies havenot experienced any slowdowns in U.S. business.


Thanks to their stronger cash flows and increasing numbers of multi-national deals, the big companies are better positioned than their mid-tier counterparts to handle any declines in U.S. business. Yet even the mid-tier companies don't seem unduly worried by U.S. economic concerns.


A U.S. economic slowdown could benefit Indian companies in the short term, says the CFO of MindTree Consulting, as U.S. companies step up offshoring in an effort to further reduce their costs. It would likely take at least three years for Indian services providers to feel a pinch from declining U.S. revenues.


Business growth in markets such as Japan and Australia will help see Indian companies through a sustained U.S. slowdown, says the MindTree exec.


While he is heartened by a recent uptick in U.S. consumer spending, the CEO of iGate, another mid-tier services provider, recognizes a need to "tighten our belts, start working more efficiently, increase productivity and learn to deliver better margins in the new tighter scenario."

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Add Comment      Leave a comment on this blog post
Jan 2, 2008 2:55 AM Dr Vikram Venkateswaran Dr Vikram Venkateswaran  says:
well i am not sure whether the stronger rupee would not have any effect on the top line growth of IT majors like INFOSYS, but a key factor will be anti incumbacy being faced by the IT majors in the multi-vendor environment with client organisations preferring an even spread among all the vendors. Tier 2 players with good quality could benefit from such a scenario. Reply

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