South Asian Business news and information

In the face of continuing economic recession in the USA, IT giants in India are losing their profit margins. Tata Consultancy Service missed its profit margin in the last quarter.Tata consultancy Service (TCS), a subsidiary of Tata group, saw 10% fall in its share price after news spread out that some of its major clients were cutting down their IT budgets. India’s fourth biggest IT firm, Satyam, also failed to reach its profit margin in the first quarter of 2008.

Not only, TCS or Satyam, WIPRO, Infosys, all the major Indian IT firms observed such failure. BBC reports:

TCS - and its smaller rivals Wipro, Infosys and Satyam - have blossomed as US multinationals have shifted services, including complex back-office IT functions, to India because of the comparatively low costs and wealth of English speakers.

Its profits have helped to strengthen the finances of its parent Tata Holdings, which recently bought Ford's British luxury subsidiaries Jaguar and Land Rover and has business interests ranging from steel mills and power generation to tea.

But analysts say there are now signs that the boom is petering out as rising household bills and tighter lending conditions are strangling the US economy and forcing companies to delay spending plans.

It is true that the current recession in the US economy have checked the growth of Indian IT firms but it will not stop. At present, very few countries can produce large pool of IT workers skilled in English language like India. So, American companies will continue their outsourcing. However, from now on, Indian firms have to look into other countries like China, Japan or any European country that are interested to outsource to India and the biggest challenge in this case will also be the language. Indian government and software should come together to remove this obstacle.

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