Post US downgrade IT companies jittery

Last Updated: Wed, Sep 28, 2011 11:42 hrs

Mumbai, Sept 28 (IBNS) Major business process outsourcing (BPO) and information technology (IT) companies especially those housed at Bangalore and Gurgaon are jittery amidst fears of another economic slump in the United States (US) and a debt crisis in Europe, according to the apex industry body ASSOCHAM.

The Associated Chambers of Commerce and Industry of India (ASSOCHAM) interacted with about 140 representatives, directors, CEOs, CFOs, Chairmen, MDs of leading companies offering IT/ITes and BPO, BTO, KPO services in various domains like pharma, (Banking, Financial Services and Insurance), auto, FMCG and manufacturing to ascertain the mood of the industry in wake of recent trouble in the US economy and gauge their extent of preparedness to deal with the crisis.

The just concluded ASSOCHAM survey was carried out at seven prominent IT destinations: Ahmedabad, Bangalore, Chandigarh, Chennai, National Capital Region (Gurgaon and Noida), Hyderabad and Pune.

About 55 per cent representatives of these companies based out of these centres said that currently the domestic sector is unfazed from S&P's downgrade of the US' credit rating and stated that the slowdown is temporary but will surely hamper the hiring activity across the sector.

Releasing the findings of ASSOCHAM survey, secretary general, D.S. Rawat said, "US and Europe account for over 80 per cent of India's 60 billion dollar IT industry and macro economic uncertainty in these parts of the world are bound to make the market gloomy."

About 25 per cent of respondents said that current round of global economic crisis won't have much of an impact on India considering the strong domestic demand of goods and services together with their exposure to other avenues like Asia-Pacific and other parts of the world.

Nearly 20 per cent of respondents said that Indian firms may report sluggish business during the course of next few months due to the slowdown besides, the industry is already reeling under high interest costs, high inflation and the stock market is also in a sombre mood.

Over half of the respondents predicted that US economy will plunge into another recession and majority of these said that Indian companies are cautious and well prepared to deal with an economic slowdown in US, highlighted the ASSOCHAM survey.

"Downgrade of US debt rating and debt crisis in Euro zone will impact recruitments in the Indian IT sector and hiring is expected to go down by about 30 per cent during the course of next few months," said Rawat.

"Apart from slowdown in foreign direct investment (FDI) growth in exports and domestic private consumption might also slump."

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