India's IT sector in the middle of capitulation with US economy headed for a deep recession and dollar ready crashing to new lows
Harish Baliga
Sep. 16, 2007

The Indian IT sector failed to create world-class products in spite of outsourcing dominance for decades. They just served ‘bodies’ that American and European companies wanted. Now they face total humiliation and a catastrophic capitulation.

Japan and China sell more to US market than India. But they do not sell ‘bodies.’ Japan sells high tech products. China sells through US intermediary low-tech products. Never in the history of the international trade, selling service of low salaried people could make a n economy rich. Eventually the advantage that comes from currency differentials disappears leaving the business in a horrible situation.

The subprime mortgage fiasco in US is dragging the world’s largest economy to a deep recession. World’s second largest economy is also confirming a slow down after getting out of a multi-decade deflation.

US dollar is falling apart as Federal Reserve has no choice but to lower the rates while commodity inflation is rampant in the economy.

The slowdown in the US and a weakening dollar is severely hitting the mid-cap companies in the country’s informational technology (IT) sector. The dollar’s depreciation has already squeezed the tech sector’s cost arbitrage advantage significantly and, experts feel, a slowdown would impact their revenues further reduce their margins. The route is not limited to the madcap companies. It is now well spread among all caps in the IT sector.

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India's IT sector in the middle of capitulation with US economy headed for a deep recession and dollar ready crashing to new lows
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The Indian IT sector failed to create world-class products in spite of outsourcing dominance for decades. They just served ‘bodies’ that American and European companies wanted. Now they face total humiliation and a catastrophic capitulation.
READ MORE>>

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