Indian software tech sector faces a major decline – can outsourcing survive?
Nathan Gulash
Oct. 18, 2008

Indian outsourcing sectors face a down ward spiral of deflation as IT purchases in the US is expected to drop sharply. “On a full year 2009 basis, a sustained recession could lead to annual US IT spending growth of 2-3 per cent and global IT spending growth of 3-4 per cent. This is just a scenario as an acute financial crisis has hit not only the US but also countries in Europe and Asia,” said Andrew Bartels, VP & Principal Analyst, Forrester Research.

The report titled-- What The Financial Crisis Means To The Tech Market--notes that the Software and IT services vendors will anyways – with or without the said scenario – start to feel the pain. They will be hit hard in the next three quarters. Vendors in these categories will have on average 3 to 5 per cent growth instead of the 9 to 12 per cent growth they have seen earlier in 2008.

Can Indian outsourcing survive in absence of American inflow of cash in exchange of cheap labor? One good thing for the outsourcing industry is that Indian Rupees has crashed. That means $1 fetches much more Rupees. But the American Administration in 2009 will not tolerate currency-manipulated schemes of draining American well paying jobs into India and China.

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