Most of the outsourcing business in the world comes from the US. The slowdown of the financial and economic sector of US affects enormously in the world especially in India because over 50% of the US share goes to the Indian software and outsourcing markets. The impact on this slowdown affects IT and ITES firms more.
The slowdown of US financial and economic sector is a prolonged one. Structural readjustments are the main reason for slowing down the financial and economy sector of US while economic scenario of the global is caused through changing the currency and financial market fundamentals. The implications are significant for all the sectors of India which are linked on it. The strongest impact would be affected on the sector of IT and ITES.
The downtrends may lose out the companies that yet haven’t show the performance. For example, if an US firm has 20 vendors today, out of them 15 are located in India; the firm may fancy deducting the number to 11 or 12. So, many employees become jobless. Moreover the budget will be decreased about 15% by US clients.
The economic crisis of US is structural and therefore in long term and the trend of low-cost off-shoring will increase.
Indian IT-ITES companies, which are also, rationalize of labor-cost by getting rid of unused labor and employment policies tightening. There has been a focus on increasing the leverage sharply at off-shore in projects to get better profitability.
The talent pool of India is getting richer and only a matter of time, the Indian IT-ITES industry overcomes the slowdown glitch of US.
Saturday, January 10, 2009
Thursday, January 1, 2009
DOWNTRENDS OF IT/ITES SECTORS – WHAT WOULD BE SCENARIO IN 2009!
As the financial and economic sectors are threatening down globally, the stock markets are tremendously dropped. The top analysts forecast that the falling down of the stock markets could reflect on the sectors of IT/ITeS in India. Their survey confirms the slower growth and lower profit could be happened in the industry of India especially on the IT/ITeS sectors.
The economic slowdown reflects a lot and very tough to reconstruct it. However, the investment banks are currently over staffed. To come out of the scenario, the investment banks are need to be converted into the commercial banks but this would reduce the employees, vendors and would have fewer budgets for IT/ITEs sectors. Financial service providers may hit to a trend of downward and may cost about 25% of the revenue because they are the most aggressive buyer in the arena of BPO services.
Most of the global IT and ITES business (nearly about two-third) are originated on the base of US. More than 40 percent of revenues of the global IT is flowed from the financial sector. More than 40 billion dollars are earned from US in the year 2007-08 and 60 percent of transactions are made by the Indian IT and ITES sector.
4-6% of the revenues of Indian IT companies are spending on sales and marketing. However, revenues are needed to minimize because of the mergers and acquisitions in US financial spaces. It creates a doubtful scenario for the Indian outsourced project in 2008; more than 25000 employees may become jobless in IT/ITES sectors. More than 40% of the major businesses may have cut their budgets for IT sections. This could be a horrible situation in the arena of IT and ITES sectors in India.
The economic slowdown reflects a lot and very tough to reconstruct it. However, the investment banks are currently over staffed. To come out of the scenario, the investment banks are need to be converted into the commercial banks but this would reduce the employees, vendors and would have fewer budgets for IT/ITEs sectors. Financial service providers may hit to a trend of downward and may cost about 25% of the revenue because they are the most aggressive buyer in the arena of BPO services.
Most of the global IT and ITES business (nearly about two-third) are originated on the base of US. More than 40 percent of revenues of the global IT is flowed from the financial sector. More than 40 billion dollars are earned from US in the year 2007-08 and 60 percent of transactions are made by the Indian IT and ITES sector.
4-6% of the revenues of Indian IT companies are spending on sales and marketing. However, revenues are needed to minimize because of the mergers and acquisitions in US financial spaces. It creates a doubtful scenario for the Indian outsourced project in 2008; more than 25000 employees may become jobless in IT/ITES sectors. More than 40% of the major businesses may have cut their budgets for IT sections. This could be a horrible situation in the arena of IT and ITES sectors in India.
Wednesday, December 31, 2008
DOWNTRENDS OF IT/ITES SECTOR AND ITS IMPACT ON THE INDUSTRY OF INDIA
The net profit of the leading exporters in India was pruned tremendously in 2007-08 compared to the previous years. The net profit of TCS was 4.15%; Wipro was only 2.8% in this year. These flat rates of net income felt in the stock market and impact on the IT companies.
US bank and financial sector is bound to take the tolls in the industry of outsourcing. IT/ITes of India was expected early on to feel the impact because of the slowdown of the economy in US. The major projects as well as small projects in outsourcing are delayed and look for a better time to increase the US and global economy market. In this scenario, some of the companies are focused on Europe and East Asia. And some of them are concentrating on domestic firms that are reducing the revenue in outsourcing or IT applications.
Though the problem is very completed, but downtrends of IT/ITeS can be recovered by taking a good plan. NASSCOM estimate that it will need around 1 million jobs in the industry to fulfill the requirements but it will also create huge unqualified hands. So management should take the proper policy to take care of the clients.
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