A slowdown in US economy unlikely to affect Indian IT

A probable slump in the US economy is not likely to impact the impetus for the IT Services Firms in India according to Analysts. This is due to the fact that their clients in the largest market would outsource more services led by digital technology. They have built these in the last few years and would also hire local workers in the US.

Many Indian IT services firms are already disrupting their models for businesses. These include Wipro NSE 1.06 %, HCL Technologies NSE -0.71 %, Infosys NSE 0.90 %, and Tata Consultancy Services. They are looking at value building through IP and productivity transitioning from the conventional model of cost-arbitrage.

NASSCOM Senior Vice-President Sangeeta Gupta said that hopefully Indian IT can sail through if it is a moderate slowdown given the digital imperative. The headroom for growth is much higher while spending on digital technology is significantly low, added Ms. Gupta.

Goldman Sachs cut the growth forecast for US economy for Q1 and Q2 2019 to 2% from 2.4% last week. It added that it was still not concerned regarding recession. Meanwhile, the bank was hopeful of a soft landing of the economy of the US, as quoted by the Economic Times.

A survey of US CFOs by the Duke University in December 2018 claimed that 50% of the CFOs expected the US economy to hit recession by December 2019.

Indian companies were among the biggest beneficiaries of the last 2 recessions. This was because the US firms opted for outsourcing work offshore for costs. It forced their international competitors like Capgemini and IBM to follow their model. They significantly ramped up their workforce in India.

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