With Indian IT majors like Infosys and Tata Consultancy Services openly expressing concern over project delays and the deteriorating economic situation in the U.S., the big question is not if but when the big desi software companies will start firing their software coolies.
The economic malaise is now spreading to Europe as well.
For Indian IT companies, the U.S. is a major market and significant macro-economic weakness here cannot but have an impact on their fortunes.
The collapse of the housing market, rising tide of home foreclosures, steady disintegration of the auto industry, a weakened financial sector, failure of banks andÂ slowdown in the retail sectorÂ are wreaking havoc on the U.S. economy.
Today’s Wall Street Journal (subscription required) has a downbeat story onÂ Â the near term prospects of the Indian IT industry:
In a gloomy assessment, Infosys Chief Executive S. Gopalakrishnan said economic uncertainties are weighing on customers’ information-technology spending in the U.S. and Europe as the malaise of weakening growth spreads.
“That uncertainty is being reflected in [customers’] ability to increase their spending….Even when budgets are released they’re not sure if they’ll get the returns…so they are not able to kick off projects,” he said.
In response to a question on when there could be a turnaround in the market, he said: “There’s no update from our side. Uncertainty continues.”
Large firms like Infosys, TCS and Wipro are bellwethers of the Indian IT sector that has grown dramatically in the last 15 years by serving U.S. corporations that have mercilessly sacrificed American workers in their desperate zeal to cut costs.