Indian IT Giants likely to miss targets

[OhioChick]

12/2009 4:32 AM ET

(RTTNews) - The Indian IT industry, in general, is entering a difficult phase and companies from this space are not expected to show any positive surprises for the December quarter. With demand for export services in the top markets of the US and Europe remaining weak, IT companies have many challenges to face in the next 1-2 years.

Companies across the sector are facing uncertain times as it is feared that several US-based financial services companies have cut down their discretionary IT expenditure pertaining to software applications and new IT projects.

IT budgets are usually the first to be slashed in downturns. Cost cutting is likely to be severe due to the crisis that hit the banking sector. While over two-thirds of IT exports are in dollar terms, more than one-third comes from Banking, Financial Services and Insurance (BFSI) clients.

Given the wild fluctuations in the rupee vis-à-vis dollar and problems in the BFSI space, the situation remains challenging for outsourcing companies. Though the impact is likely to be muted, the woes of auto companies in the US are also likely to affect margins in the next 1-2 quarters.

Of late, IT firms are also coming under pressure to reduce their number of onsite work force as customers such as Royal Bank of Scotland, GE and Bank of America are tightening their information technology budgets and are questioning the traditional model of billing customers based on time and material invested in projects, especially for work where fewer professionals could be billed.

More: http://www.rttnews.com/ArticleView.aspx?Id=821571&SMap=1

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[ChromeFoundry]

1. I'll join you...

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[Skittles]

2. :)

:rofl:

[Azlady]

3. waaaa.. Oh those violins -

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[ihavenobias]

4. That does seem to be true regarding IT budgets and downturns. n/t