Switch to core services helps IT firms bear US freeze
There are no extreme risks for outsourcing firms, even if the business environment of their customers were to substantially weaken.
By TNN |
NEW DELHI: With the IT industry less cyclical than before and Indian outsourcing firms moving away from project-based application development & maintenance work (ADM) to long-term infrastructure services, the economic slowdown in the US is not likely to significantly impact Indian firms next year, say outsourcing consultancy Everest and research firm Bernstein Research.
In a presentation at a webinar (web-based seminar) on impact of US economic slowdown on IT spending, the two firms said their joint survey of buyers and suppliers has shown that there are no extreme risks for outsourcing firms, even if the business environment of their customers were to substantially weaken.
While infrastructure outsourcing, including remote infrastructure outsourcing, is likely to weather a slowdown in spending well, it’s ADM and consulting services that have shown a greater economic sensitivity in the past. “Project-based work (like ADM) is resilient in the initial stages of cost cutting, but prone to overreaction if recession persists,” the presentation pointed out.
Infrastructure outsourcing comes often under long-term contracts and most such services can’t be switched off due to their critical nature. Even if buyers try cost-cutting efforts in IT infrastructure, it would also require some IT consulting.
In a presentation at a webinar (web-based seminar) on impact of US economic slowdown on IT spending, the two firms said their joint survey of buyers and suppliers has shown that there are no extreme risks for outsourcing firms, even if the business environment of their customers were to substantially weaken.
While infrastructure outsourcing, including remote infrastructure outsourcing, is likely to weather a slowdown in spending well, it’s ADM and consulting services that have shown a greater economic sensitivity in the past. “Project-based work (like ADM) is resilient in the initial stages of cost cutting, but prone to overreaction if recession persists,” the presentation pointed out.
Infrastructure outsourcing comes often under long-term contracts and most such services can’t be switched off due to their critical nature. Even if buyers try cost-cutting efforts in IT infrastructure, it would also require some IT consulting.
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