Indian IT Bracing up for a 10 Year Low Quarter

Date:   Wednesday , December 31, 2008

Even as India government is saying that recession is nowhere near the country, the Indian IT biggies like Tata Consultancy Services (TCS), Wipro, and Infosys are bracing up for an even bad spell looming ahead. The IT majors are predicted to be witnessing the worst time in almost 10 years in the quarter ending with December 31 this year. The analysts predict that a decline in offshoring business from the U.S., which accounts for almost 50 to 60 percent of the revenue of the companies, will cause the lowest sequential growth in volume in the Indian IT industry.

Of late, many Indian software services firms opt for the so-called time and money contracts where they bill the customers by man-hours spent on a project. Their growth in revenue is a function of man-hours and billing rates. However, the research firm Merrill Lynch's analyst Mitali Ghosh says that instances of companies wishing to renegotiate the rates have grown in the past three months. The risk faced by companies opting to work with fewer service providers had combined to push the billing rates to under $20 an hour in some cases.