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IT firms have a tough time as clients cut budget
By siliconindia
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Saturday, 05 July 2008, 17:48 IST
Mumbai: This may be one of the worst times the IT firms have ever faced. Instability in Global market and the U.S recession have made the firms hard to sustain. As it also increases the burden of the IT clients, they are planning to reduce the share for the IT needs from the total budget. To defend the situation the IT companies may have to reduce rates for the services they offer. Most of the Indian IT firms seem to be facing pricing pressures and are struggling to remain on the ground because of the recession and the depreciation of the rupee against dollar. A recent CLSA (Asia Pacific Market) survey of nine top IT vendors says four of the nine respondents expected pricing to be stable and at last year's levels, while five of them expected pricing to deteriorate slightly, but stay positive, reported The Economic Times.
The UBS, which has written off over $35 billion, is said to be looking at a lower IT budget and 8-10 percent cut in pricing, while JP Morgan is reportedly asking for 15-20 percent pricing cuts in return for higher business. UBS is one of the major clients of Infosys and while JP Morgan is a top client of Cognizant Technology Services.
Most of the IT companies have assumed a value of Rs 40 to the dollar in their guidance, but the rupee has fallen to Rs 42-43 against the dollar. The time demands a reduction of pricing of the services by the IT firms. Reducing price would worsen the condition of the IT sector which is already facing a reduced volume of business because of project postponements and delayed decision-making. However Major Indian IT companies did not respond on the issue.
