Indian IT has been abuzz with speculations about its future businesses. A large chunk of IT firms in India are directly or indirectly dependent on the fortunes of the BFSI sector. The past couple of weeks have seen a turtling or a major loss of business/goodwill of a number of major players in the BFSI sector leading top IT experts to sound alarm bells.This was a major cause of concern for India Inc since the Indian IT/ITES sector employs a huge chunk of the nation's population and large scale lay-offs in this sector would have led to a creation of an undesirably large demand for jobs.Goldman and Morgan have undergone a metamorphosis into Retail banks as per a decision formally announced yesterday. A causal effect of this shall be an increased Fed control over both the iBanks and the resultant array of regulations imposed on them.This news is bound to bring some solace to Indian IT because more regulations would mean an RMC (Rationalization/Modification/Closure) of the existing software backends of Morgan and Goldman and this work shall inevitably be offshored to its existing SI/SSP vendors.
Most of the existing gaps have been filled. BOA acquired Merryl lynch about a month ago.Barclays took over North American Operations of Lehman last week. Nomura Holdings ( A japanese firm) has announced a take-over of Lehman's A-Pac operations. Royal Bank of Scotland is vying for Lehman back-office employees in India. JP Morgan , too is in the fray to divert some of Lehman's man-power by organizing recruitment drives. Account Managers/CFOs at major IT firms have been spending a lot of sleepless nights, mulling over the ways in which they are going to balance their annual statements in case of a huge loss of business/revenue. Thankfully, the consolidation in the financial sector has averted such a debacle over the short term.
Partha Iyengar, Head of Research Operations - Gartner(India), also, has expressed an optimism about a turn-around of the current slowdown by the end of FY 09.
Circa 2001-2002 saw the IT bubble burst in a major way thereby rendering the Indian IT sector virtually crippled.There is little doubt that Indian IT firms, with their relentless efforts at providing satisfactory services to their business clients, have garnered an enormous amount of Goodwill in their Balance Sheets since then. In spite of being a purely intangible asset, the credibility that Indian IT has earned over the years, will probably keep the sector in good stead and take it through this turmoil.
