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GM's bankruptcy will impact Indian service providers

June 02, 2009 16:53 IST

Auto major General Motors' bankruptcy could impact Indian service providers in a 'small' but 'significant' way.

'The immediate impact would be delayed payments, followed by slowly ramping down of existing projects while retaining only the ones that are mission critical,' Karthik Ananth, engagement manager, Zinnov Management, a leading management consulting firm, said.

'In the long run, it would have a trickle down effect on tier one and tier two suppliers for auto majors. They will indeed see an impact on their business, which in turn will impact the business of Indian service providers, who work with them and have them as key accounts,' he said in a release in Bengaluru.

From an overall perspective, though there would be recovery from recession, the auto industry for Indians service providers is likely to lag behind other industries. However, there would be a positive outlook in the long term because of investments that will be made in new technologies and environment friendly vehicles, he said.

Underlining the opportunities that could emerge, he said major assets of GM could be sold and most of them will be acquired by private investors or auto majors from Korea, China and even India. Hence, these companies in the long term become potential clients for Indian service providers.

"The vacuum created by GM in the market will provide an opportunity for auto majors from Europe and Japan to create a greater market share for themselves. Indian service providers will hence have to grow their accounts with these companies," he said.

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