I would like to share with you a few articles I found recently about IT service Indian outsourcing market:
By Shyamanuja Das
The IT services exports industry has entered FY 09 amidst some good news and some bad. While Q1 performance has been in line with expectations, thanks partially to the rupee falling against the dollar (yes, this will continue to remain one of the top influencers of IT companies fortune), the forecast for Q2 traditionally a strong quarter remains cautious. While, Wipro and Satyam have issued cautious guidance, Infosys says that the survey among its customers shows a better fortune in Q2 (October to March). Satyam also has a similar guidance.
On the other hand, TPI, the sourcing advisory firm that tracks outsourcing deals globally, says that 246 outsourcing contracts worth $25.6 bn were awarded only in the Q2 quarter. Between January to June, the firm says, the highest number of contracts were awarded in FY 08 in the last ten years.
The firm says that in the next two quarters (corresponding to Q2 and Q3 for Indian firms), the momentum will continue. TPI also says that the EMEA region is witnessing the maximum growth in outsourcing contracts.
This is good news. So is the falling rupee.
But the worries remain about the American market. Many remember the 2004 anti‐offshoring slogans of John Kerry. The presidential elections are back and democratic candidate Barack Obama is the front runner, unlike John Kerry in 2004. Obama has so far remained less scathing in his remarks against outsourcing but has expressed many a times that he would like to save American jobs, by offering incentives for creating jobs in America than creating anti‐offshoring legislation. Is this good news or bad? Unlike Kerry, who used jingoism, Obama argues his points cogently and many expect that he will do what he says. If he does offer incentives to create jobs in America, it will hit the bottomlines of all outsourcing firms. But much of whatever happens due to changed policies will happen after the end of FY 09. As far as elections are concerned, the anti‐offshoring issue is not so much in the limelight. But the US slowdown is a real fear. While many argue that it will result in offshoring activities being stepped up, many others are not too sure. The learning from the past shows that mature outsourcing projects are stepped up while new initiatives and smaller isolated experimentations suffer. This means there may be lesser new contracts while more contracts will come from existing customers. Even TPI data supports this.
It is fairly safe to conclude that slowdown will do to outsourcing what air does to fire or absence does to love: it extinguishes the small, it intensifies the large. Expect the existing customers to rule.
On the other hand, TPI, the sourcing advisory firm that tracks outsourcing deals globally, says that 246 outsourcing contracts worth $25.6 bn were awarded only in the Q2 quarter. Between January to June, the firm says, the highest number of contracts were awarded in FY 08 in the last ten years.
The firm says that in the next two quarters (corresponding to Q2 and Q3 for Indian firms), the momentum will continue. TPI also says that the EMEA region is witnessing the maximum growth in outsourcing contracts.
This is good news. So is the falling rupee.
But the worries remain about the American market. Many remember the 2004 anti‐offshoring slogans of John Kerry. The presidential elections are back and democratic candidate Barack Obama is the front runner, unlike John Kerry in 2004. Obama has so far remained less scathing in his remarks against outsourcing but has expressed many a times that he would like to save American jobs, by offering incentives for creating jobs in America than creating anti‐offshoring legislation. Is this good news or bad? Unlike Kerry, who used jingoism, Obama argues his points cogently and many expect that he will do what he says. If he does offer incentives to create jobs in America, it will hit the bottomlines of all outsourcing firms. But much of whatever happens due to changed policies will happen after the end of FY 09. As far as elections are concerned, the anti‐offshoring issue is not so much in the limelight. But the US slowdown is a real fear. While many argue that it will result in offshoring activities being stepped up, many others are not too sure. The learning from the past shows that mature outsourcing projects are stepped up while new initiatives and smaller isolated experimentations suffer. This means there may be lesser new contracts while more contracts will come from existing customers. Even TPI data supports this.
It is fairly safe to conclude that slowdown will do to outsourcing what air does to fire or absence does to love: it extinguishes the small, it intensifies the large. Expect the existing customers to rule.
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