Effect of the Global economic crisis on Indian outsourcing

The Economic problems in the US and the debt crisis in Europe, are not limited to the foreign shores, only. Indian outsourcing industry has started to get sleepless nights because of it. Apart from the difficult business surroundings, the Indian outsourcing companies are also suffering from some domestic streamlining and leadership challenges. India’s top 4 outsourcing companies are suffering from the global crisis. This includes, Cognizant, which is based in New Jersey. Most of its work is being executed in India.

Demand for outsourcing is slowly growing in India’s domestic market but the industry’s fortunes remained tied to the West.. On an approximation, about 80 per cent of the Indian industry’s $60bn yearly revenues come from these foreign markets. A dreary economic conjecture in these markets led to the  selling off, of outsourcing stocks,. There prices dived down to an average 20 per cent to 52-week lows.
Global Economic Outsourcing

On the other hand, atmosphere at the Tata consultancy services, which is based in Mumbai was different. They said that they did not expect changes in demand from their customers in Europe and North America.

The top most companies can see a reshuffle in their rankings which were long held by them, in the year 2012. As a matter of fact, Wipro which is places ad number 3 in the big four, has already given up its slot in the chain of command to Cognizant, which is a comparatively new company.

Cognizant has approximated a 30 per cent year-on-year growth rates for 2011 . If it continues to go ahead on such a speed, it won’t be surprising if it surpasses Infosys, which is the number two company by the end of the year.. A break of less than $200m in quarterly revenues separates Cognizant and Infosys.

SD Shibulal, Infosys’s new CEO said, ‘’ The company is facing a challenging environment, as of now, Customers are tightening up their tech spends.  In my talk to the wipro CEO, T.K. Kurien, he told me that the market sentiment is irregular. Growth will ,for the most part, incline towards certain markets and industries.’’

Both Infosys and Wipro have recently had leadership changes. Narayana Murthy , from Infosys chose to step down as executive chairman of the company on 21 August .The new CEO is KV Kamath. Surprisingly, he has a background in banking rather than outsourcing. Along with him, is SD Shibulal, who is the last of the original founders.

Wipro,too has practised a succession of exits, some intended and others not. It now has induced a new team at the top.