Economic troubles in North America and Europe, which account for close to 90% of revenue for the Indian information technology (IT) industry, are bound to affect the fortunes of software services exporters in 2012.
However, analysts say that even as companies in these regions keep IT budgets unchanged or cut them in 2012, more IT-related work may be outsourced to low-cost countries like India as the firms seek to cut costs and remain competitive. This will help IT companies keep their heads above water, aided by the sharp rupee depreciation.
Over the last three months, research and advisory firm Offshore Insights conducted some 300 phone interviews with decision-makers across North America and Europe. Over 80% of the survey respondents—essentially clients who offshore work to low-cost countries like India—said that despite 2012 being a “very to somewhat challenging year”, their IT spending would be flat or cut by just 5-10%.
“This is not bad news for Indian IT firms since companies abroad may look at offshoring to cut costs and become more productive with lower investments,” said Sudin Apte, chief executive officer and research director,Offshore Insights.
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The $88 billion Indian IT outsourcing industry, according to the National Association of Software and Services Companies (Nasscom) is projected to touch $225 billion mark by 2020. For the fiscal year ending 31 March, Nasscom expects the IT services revenue growth rate to be around 15% from a year ago.
via Outsourcing, falling rupee to keep companies afloat – Home – livemint.com.