Indian vendors will lure more IT clients despite downturn

Bangalore: The Indian IT industry may soon see a positive impact of the economic depression with the crisis hit customers immensely preferring familiar vendors in India instead of investing in new geographies. This may result in wiping-out of the growing competition from the emerging IT destinations.

Despite the staggering economy pressurizing the IT competitiveness in India, Sudin Apte, Senior Analyst and Country Head, India Operations, Forrester Research says, "People are very risk aversive, and in a climate that is challenged, they would send work to known destinations. I think this is a benefit for India in a way as it would give them breathing space for the next two years or so." Moreover, offshoring to a new destination would result in increasing the transaction cost as it would include the costs of reviewing and auditing. So, the long gained reputation as an offshore hub makes it more feasible for India to become the comfort zone for further investments by crisis-hit customers. "Some of our clients are hesitating in evaluating new geographies mainly because of this business challenge. If they have operations in India, they would ramp-up the existing presence in India rather than go to a new destination for the work they are already doing in India," said Vinu Kartha, Principal, Tholons Consulting, an offshoring advisory company, as reported by Business Line. This trend to stick to Indian IT will definitely be a breather for the sector, which is highly suppressed by the current financial instability.

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But Nikhil Rajpal, Principal, Everest Research pinpoints that people go out of India as part of the de-risking policy. Therefore, if the growth in business is less, the need to diversify will be less. So, only if the growing IT hubs turn conducive to fulfill the client requirements, then these will be able to rope in more vendors.