Chrysler, GM crisis to hit Indian IT firms

By siliconindia   |   Wednesday, 01 April 2009, 19:09 IST   |    7 Comments
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Bangalore: Indian IT companies and auto parts suppliers may feel the brunt of the crisis at the U.S. automobile majors General Motors (GM) and Chrysler as deals worth nearly $1 billion( 5,000 crore) that annually coming to Indian vendors is under uncertainty this year. If GM files for bankruptcy, Indian IT firms such as TCS, Wipro and Satyam and some of the auto component vendors will be impacted badly, reported The Economic Times. According to an outsourcing expert, GM and Chrysler award software projects worth $300 to $350 million annually to major Indian IT companies. "Several new outsourcing decisions are pending at GM and Chrysler because of the uncertainty about their future and the anti-offshoring sentiment that is being voiced by many political lobbyists," said a person familiar with outsourcing decisions at these auto companies. GM is among the top 10 clients for Indian IT firms. Wipro had signed a five-year contract worth $300 million with GM in 2006 and TCS has a deal worth $150 million with Chrysler signed last year to maintain software applications. Any reduction in outsourcing will hurt both of the companies. Anand Rathi Securities institutional equities Director Tarun Sisodia said that GM bankruptcy could hit the revenues of large Indian IT firms by about two percent and added that that it was unlikely that the U.S. government would let these companies fail. Auto parts suppliers in India are also feeling the pinch of the crisis. "We are worried and closely watching the developments in the U.S. to gauge the impact. The decline in auto sales in the U.S. has already hit the order books of Indian suppliers," said a Delhi based auto component supplier.