Industry is also apprehensive that the Democratic regime in the US could reduce the visas and the work permits.  However technical resource continues to be in shortage and US needs IT skills and because of the current situation, wherever they are trying to improve efficiencies, they need to offshore.  So it is assumed that there won’t be significant impact on the visa front.

The fundamentals of Indian economy are very strong and though there are concerns but there is no need to be panicky.  This recent phenomenon has influenced Indian IT companies to relook at its processes and rationalize resource allocation and spending.  The downturn provided an opportunity to focus on leadership and innovate.  If we can change the way our customer functions and demonstrate the value creation we will continue to grow.  As a result many operational performances and efficiency parameters have improved such as DSO(Day Sales Outstanding) has come down for top 4 companies which shows that the IT companies are actively working with their clients and are putting extra efforts to improve collections.

As a part of non-discretionary spends (time and material cost,) firms will continue to outsource ITES/BPO services in areas such as accounting, HR and logistics.The industry has matured to live with one or other crisis such as currency volatility, global economic slowdown, attrition and higher wage arbitrage because the fundamentals remain strong and the value proposition continues to be high. This is the time for IT firms to de-risk their marketing strategy from being US-centric and foray aggressively into other geographies - EMEA (Europe, Middle East and Africa) APAC (Asia-Pacific) and Latin America.  "For instance, our penetration into the Japanese market is a mere 2% though Japan is the second largest economy in the world.  Socio cultural and language issues can no longer be barriers in a competitive global environment.

Continental Europe is slowly warming up to concepts of outsourcing and offshoring.  Many Indian IT companies are making investments in Europe to grow the capacity to meet the future upswing in business after the downtrend is over.  This also helps to reduce dependence on US market.  Europe is also becoming the Nearshore centre for IT companies, especially areas like UK, Poland, Czech Republic and Germany.  There is much bigger potential in some markets such as France, Germany and Nordic countries that are behind the curve in outsourcing work to Indian vendors.

Indian companies are focusing more on risk management strategy and agile hedging.  Indian IT company needs to move beyond competence in engineering services, infrastructure management and enterprise business solutions to transformation services that would create a greater impact on existing businesses.

As a rub of  , attrition rates has come down to 6 to 7%  in the last 2 months.  The outsourced product development firms (OPD) that build software products for other companies are not so affected by the down turn till now.  Most of the R&D outsourcing happens in a bust cycle as cost pressures force customers to outsource more.  E.g. Oracle, NetApp and Nokia etc, continue to outsource product development software from India which is quite significant.  However the smaller ISV’s are taking the hit and there will be some consolidation.

Most of the customers based in USA are also derisking their business model .Like US share of Caterpillar revenue has come down to 55% from 60 % last year  and tremendous growth is seen in their non US regions like AMEA,CIS and Latin American market.On an average about 80% of the outsourcing to Indian IT Industry fall in non-discretionary category.Therefore the net effect on Indian IT industry  will not be something we would not be able to take.

Nasscom has revised the growth rate of Indian IT services export to 23-25 % from 30-35% during 2008-09. Still as per the McKinsey report even at 23-25 % growth rate ,Indian IT industry will meet its targeted export revenue of USD 60 Billion b y 2009-2010.

IT industry in India finds the current situation an opportunity to rationalize its leadership team and right size its work force and realign its onsite offshore composition.

While the crisis is a reality we must know "when the going gets tough, the tough gets going".  We need to turn this crisis into an opportunity, we need to align closer to the customer and address their key priorities.  Like new market expansion, cost reduction, innovation. We can orient our offerings to be an innovation and business transformation partner to our customers.

We need to stay very close to the CXO’s of our customers. We must focus on delivery excellence which is very critical now.  We must re-look at operational efficiencies to control the operating margin and other parameters.

As business dries up competition will be intense.  So we must be extremely alert.