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Credit Crisis Impact on Indian Outsourcing jobs, software layoffs -My thoughtsBY: Bharat | Category: Technology and Computers | Post Date: 2008-09-29
Is the future of outsourcing in India is at risk: I think that time has come when we will start to see some changes in the Indian software industry in terms of reduced hiring of engineers and possibly some layoff's in many software companies (atleast in a short term). It's not just the United States, but Europe also bailed out 3 of its banks because of mounting losses due to credit crisis. Some believe that this is the time to sell dollars and buy Euro, but I personally share a neutral opinion about it because Europe has it's own set of issues. Gold has also climbed a lot recently.
What happens is yet to be seen, nothing can be said with certainty. There are both positives and negatives from this credit crisis. Most likely the impact will be limited, but media will likely underline every event in red letters, enough to scare public. There will likely be growth but at a slower pace.
1. Bankrupt US financial institutions:
Several banks like Lehman brothers and many big banks Indymac, New Century have closed down or filed for bankruptcy protection. Lehman brothers was one of the prominent companies which got it's works done in India via outsourcing clients. It is very likely that now there will be a huge cut in total software projects. How many Indian outsourcing companies will get effected, still need to be seen.
Big mergers like Citibank-Wachovia and Bank of America- Merrill Lynch, will also result in consolidated operations, which also results in lesser number of total software projects.
3. Falling Stock Markets:
If the global stocks continue to decline, it will result in loss of jobs or planned layoffs for bottom 1-10% of employees anyway.
4. An overall slow spending mode:
During a slowdown, even those industries which are not directly impacted seem to be conservative in spending money and doing new projects.
Other side of the coin - POSITIVES:
1. Less money to spend on could mean more projects for Indian outsourcers in a long run as America and European companies will look to get their work done at a cheaper rate even more.
2. Indian banks have a less impact of US credit crisis and it is possible that the recovery of Indian stock market is faster than the American stock market, which will be good for us.
3. Aging workforce in Europe and United States will likely open new opportunities in India looking for fresh blood, also medical software industry in India can flourish in a long run.
4. This will also be a good time for Indian companies to acquire some foreign software companies for cheap and get a better footing in their overseas operations.
Therefore if I were a Computer Science Student with just a year or so left to complete the engineering degree, I would rather be preparing for a Masters Degree than taking chances in the current turbulence of software industry. But if you are from one of the elite engineering colleges, then you probably are much safer.
29 September 2008: Software and services sector growth in the country could be slower than expected this year as the global financial crisis hits exports, - Nasscom.
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About Author / Additional Info: I am not a researcher .. these are my personal views
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