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Indian vendors will lure more IT clients despite downturn
By    siliconindia news bureau
Tuesday,04 November 2008, 03:14 hrs
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.

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.

     
   
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Reader's comments(4)
1: I totally agree with Mr. Krishnan, someone's loss is someone's gain. In this recession scenario in the developed countries, they cannot afford to invest into a bleeding economy and expect to generate profit or sustain, so most of them would like to cut cost (layoff's) and try to get the work done at a cheaper destination, not compromising on the quality of work ... and voila this is the right recipe for offshoring countries like India. We still gain when they loose.
Posted by: Abijith - 09:42 PM Nov 04, ' 08
2: well, i have found someone who is talking what i have been advocating. there is an opportunity in every crisis and in this situation, india stands to gain.

the world ( read US) cannot stop functioning and the life has to go on. lot of work ( i am refering to the IT related here) will get offloaded to countries where there is a well oiled machinery constantly delivering for last 2 decades.

the current crisis in the world would spell boon for india. give it 2 to 3 quarters and india will be on a roll again.
Posted by: Krishnan - 11:28 PM Nov 03, ' 08
3: what a crap!
Posted by: critic - 07:04 AM Nov 03, ' 08
4: hope this trend is a real thing..
Posted by: kanya - 03:44 AM Nov 03, ' 08

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