Tuesday, February 12, 2008

Recession, will IT be hit

Steve Hamm views it as "not a great effect" and I think I agree with him.

In the short to medium term, companies here will actually get more work since companies there will try to cut more costs. And who will they turn to than these service providers? And unlike in 2000 odd, by now they have a decent reputation built up, so you could actually see their work increase. Whether their margins increase is a matter of debate and I dont think they will, but topline can surely go up. Also, if these companies can really help these companies cut costs, they would have built a great relationship which will help them grow with them once the economy is back on track (read - growing). Unfortunately many IT companies do not see beyond their nose on the immediate work - so that needs to change.

Over a longer term, though, when consumer spending drops, companies "shrink", make lesser money and hence over the longer term growth of the companies (and hence their tech spending) will be affected. So, if this trend continues, Indian IT will be affected pretty badly, but in the short and medium term, theres work to be done and money to be made.

1 comment:

barbadkatte said...

My feeling is that whether Indian IT Cos gain or lose, will depend on how the US recession progresses. If it quickly becomes a deep recession, Indian IT will lose. A slow recession will benefit Indian IT. From the looks of it, the FED is trying to engineer a slow recession ( or rather trying to stop a ugly recession), so if the FED plan works, Indian IT should benefit. Ofcourse Indian IT needs to trim costs. The days of runaway wages are probably over.