Its a long perceived notion that US recession shall hit the Indian economy specially the IT sector really hard, but then there is a different school of thoughts as well. It says that the recession might not exactly be bad for the Indian IT sector.
A report from Gartner says US economic slowdown will lead buyers of IT services to consider increasing the percentage of their labour in offshore, lower-cost locations. India will remain the dominant location for IT offshore services for North American and European buyers as a result of its scale, quality of resources and strong presence of local and traditional service
With concerns that the US economic slowdown could extend to other geographies, organisations are refocusing on IT cost reduction and taking steps to accelerate the use of offshore labour, Gartner said. Buyers of IT services will shift from cost-containment goals to a greater focus on cost reduction and productivity increases in their sourcing decisions. This will lead to a steady increase in the adoption and expansion of offshore services - primarily from India, but increasingly from other countries as well.
But the flip side of the recession would be that there could be a drastic cut in the IT expenditure of these firms , meaning the indian IT companies might not be able to negotiate for increased charge backs.And with the salaries in the Indian IT companies increasing at a fast pace the IT companies might take a hit !
