I had earlier voiced my opinion that US recession may be a boon for Indian offshore software companies. Infact, even as America is moving into recession, Indian offshore companies are getting more business than ever before.
The impact of recession is undoubtedly higher to small and medium sized enterprises whose bottom lines get squeezed due to lack of spending by consumers. These thousands of small and medium enterprises are increasingly waking up to cash in on the outsourcing wave, a market opportunity explored by their big daddies for a couple of decades now.
“SMEs in the US are under severe pressure to increase profitability and business margins. This will force them to outsource and even have M&A arrangements with Indian firms. India is going to be a great beneficiary of this trend. This will substantially offset or minimize the impact of the US recession on Indian industry,” said Adam Larkey, partner at Wolet Capital Corporation, a New York-based investment banking firm.
By March 2008, India had received SME outsourcing deals worth $7 billion from the US as against $6.2 billion in the previous year. This is expected to be $8 billion by March 2009 and $11 billion by March 2010. The total outsourcing from the US by that time would be $54 billion. [source]
This is a shot in the arm for Indian software companies who have been under great pressure due to appreciation of Rupee against dollar over last year.
US recession does not seem to be as bad as Indian stock markets have made it out to be !