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Friday, May 23, 2008

USA Downturn and Indian IT Industry - Effect and Analysis

Impact of US downturn on Recruitment / Placement By Indian IT Major Companies:

The USA economy continues to be significant to the world's economy. The current US subprime crises has hit the USA Financial majors hard. Morgan Stanley, Goldman Sachs, Citigroup, etc. have been hit hard by the current crises. Various european majors have also been hit hard by the USA home loan defaults.
This could mean some change in business for the Indian offshoring operations of these US and European Financial Majors. This could infact trigger consolidation in the Domestic industry which will be beneficial to the industry over a timeframe of 2 - 3 years considering the huge costs of attrition and training of employees.

The current crises in USA will impact the world's manufacturing sector more than anyother sector. The USA currently has a great appetite for world's goods from footwear, garments, furniture, plastics,toys, auto components, electronics and almost everything else.
The ever increasing USA trade deficit fueled by the large appetite of US consumers has been supporting the growth of manufacturing sectors in many countries particularly in India, China and other Asian countries. There are some sectors in these countries which rely on exports for creating large scale jobs and most of the exports continue to be into USA. So the current US slowdown in growth will impact the Demand and the import growth may slowdown or may be negative if current situation continues. This could spell doom for many export dependent industries impacting jobs creation in India. But the impact in India will not be as much as in other Countries like China as Indian growth is much more stable and not that much export led. So the reasons for worrying are surely lesser than for its neighbour China.

Impact on IT and BPO Sector:
Some say Hiring will be impacted a lot. Some people forecast decrease in hiring or even layoffs in IT companies. But the real fact is that The US Downturn may be actually good for the Indian IT Companies. This will steer the Indian companies and The IT / BPO Industry as a whole into an era of sustained growth. The Indian IT sector could use the current situation as an opportunity to project itself as the place where hard-hit American software companies can park their IT services. The US slowdown may trigger more outsourcing by US Business and the Indian Companies be it IT / BPO / KPO are well prepared to take advantage of this. The US industry may go for more efficiency and cost cutting in the form of layoffs and offshoring. Much of the layoffs may be accompanied by hiring in low cost countries like India where labour is much cheaper than in US and other countries. So it could mean more growth for indian IT industry.
We, humans are limited by observations and forecasts. And, we have to live upto the time to see what actually happens. No one can say anything certainly! Lets hope for the Best for India and the Whole World! God Bless All!

1 comment:

chemsquare India's leading chemical bazaar said...

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Bye