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How Safe Is The Outsourcing Sector In The Current Economic Climate?
With uncertainty surrounding the economic climate
, its no wonder that even the most stable of companies are wondering whether theyre next to go. As a result, how safe is the outsourcing sector? Or is it just as vulnerable as the many businesses that have recently closed their doors for the final time?A senior executive at Indian outsourcing group Tata Consultancy Services (TCS) has played down speculation that the parlous state of the global economy could impact the outsourcing sector.
According to MarketWatch, TCS Vice-Chairman Subramaniam Ramadorai said in a recent interview with Dow Jones Newswires that he remained cautiously optimistic about the demand outlook for technology outsourcing services, in spite of fiscal worries in the US and Europe.
Indias technology industry has witnessed rapid growth in recent years, but there are concerns the long-running economic crises in some Western countries could dampen demand for overseas outsourcing. Banking stocks have come under pressure over the last couple of weeks, as fears over eurozone sovereign debt have resurfaced.
Last week, TCS chief executive N. Chandrasekaran told CNBC that there had been no signs of cutbacks or delays to IT outsourcing projects recently, and said he didnt foresee a slowdown in discretionary expenditure on technology. However, his comments were contradicted by an earlier report from Infosys, which suggested uncertainty in major economies had prompted some clients to reconsider their spending on IT.
And, it seems that Tata Consultancy Services (TSC) arent alone in their thinking, as an expert has claimed that some Indian outsourcing companies could be set to curtail recruitment activity over the next few months, as a result of being concerned about the global economy.
Speaking to the Economic Times Sridhar Ganesan, a Managing Consultant at Hay Groups Mumbai office, it was suggested that there could be a slight downturn in hiring activity among IT contractors, although he predicted the slowdown would be less pronounced than that of three years ago.
Post 2008, business planning with high focus on risks and mitigation has been critical for Indian IT firms. The precedence of 2008 in terms of outlook and forecasts is therefore much more realistic, he explained.
Mr Ganesan added that many clients remain tied in to long-term contracts at reasonable rates, thereby minimising the impact of the current economic uncertainty. He also noted that some outsourcing firms had themselves looked overseas in recent months.
It certainly looks as though whilst were seeing a handful of companies steer clear of the concept of outsourcing, others are interested to know what it could mean for them. As a result, whilst more jobs are created theres also a risk of outsourcing jobs becoming difficult to secure; a direct result of the many businesses crumbling around us.
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