India's IT-BPO industry warily cheers Obama's victory, fears cut down in outsourcing

Indian IT firms depend on the US clients, especially those in the banking, financial services and insurance (BFSI) sector, for major portion of their revenues, but the Goldman Sachs survey has revealed that chief information officers (CIOs) of companies in this sector are preparing for a cut of 10-20 percent or in some cases, even higher, in their IT spending budget.

"Our conversations with CIOs across many verticals, as well as with management teams in our coverage, have emphasized the broad-based nature of the current downturn, both by vertical and geography," the report noted.

However, this "cost-constrained IT budget scenario" is not restricted to the US alone. The survey also forecasts negative growth in IT spending in other key developed markets like Western Europe and Japan in 2009. The telecom segment, which was not affected significantly in the current year, is forecast to show a 7 percent decline in capital spending. Manufacturing is expected to show flat growth to 10 percent lower growth, while government spends are also expected to soften quite a bit.

More scary is an IMF report which warns that advanced economies would slip into recession next year, while the growth rate of Asian nations would come down.

In its World Outlook Report, IMF said advanced economies, including Germany, France, Italy, Spain and Japan, would see a negative growth of 0.3 percent while the US and the UK could witness contraction of their economies by as much as 0.7 percent and 1.3 percent respectively.

Decrease in demand and contraction of activity globally have already made their effects felt in the Indian IT-BPO industry with leading IT firms like TCS, Infosys and Wipro reporting muted earnings during the September fiscal quarter and preferring to remain conservative in their outlooks. India's software and services exports stood at nearly $40.4 billion during financial year 2008, up from $31.4 billion in the previous year, with the US as its largest market. The revenue of overall IT-BPO industry, including the domestic market, recorded 28 percent growth to touch $52 billion in financial year 2008.