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We'll withstand US-led downturn: Indian IT cos

August 08, 2011 10:40 IST

Even though industries across the country have expressed concerns over the debt crisis in the US , aggravated after the downgrading of its sovereign rating by S&P, Indian IT industry remains confident of withstanding another downturn.

While most agree that there are fears of another recession in the US and a debt crisis in Europe, they also feel it is still early days to know what is coming.

Country's second largest software exporter Infosys CEO and MD Kris Gopalakrishnan says, "It is too early to say. There are fears of another recession in the US and a debt crisis in Europe.

"We were able to react very quickly in the past (2008) when the recession happened. These responses are still fresh in our memory and I believe that the industry will be able to withstand another downturn."

The US accounts for almost 60% of the revenues for the USD 60 billion Indian IT industry.

Leading industry chambers like CII, FICCI, Assocham and FIEO, which represent companies across the country, have expressed concerns over events in the US economy.

The Federation of Indian Exporters Organisations ((FIEO) chief Ramu Deora said, "The downgrading will lead to further appreciation of rupee against the US dollar which is already facing the heat, thereby blunting our competitive edge.

"The US Government will have to increase taxes to bring in more people under the tax net to curtail its deficit which will further shrink their disposable incomes and may have an impact on India's exports to North America."

He added, "Our worst fear that exports and fourth quarter (economic growth) will be affected may come true."
While most IT companies have expressed caution in the past few months on the European debt crisis and high unemployment in the US, they also remain confident of being able to maintain their growth momentum.

Leading players like TCS and HCL Technologies have posted stellar growth numbers in the past few quarters on the back of steady demand for outsourcing services.

"We think the environment is good in spite of the macro economic uncertainty in different parts of the world.

"Some of the countries are failing in Europe and there is the issue of unemployment in the US, but still I think customers are going with their plans as they had originally intended," said N Chandrasekaran, CEO and MD of country's largest software exporter TCS.

Industry analysts say the companies are watching the situation.

"It is still early to hit the panic button. Companies continue to outsource as they look at multiple factors like operational and cost efficiency. The deal pipeline for most firms seems to be strong and so, companies are remain confident," they added.

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