A prolonged recession in US and offshoring

Source: Hindu Business Line
Mumbai, April 26 The current US economic slowdown will lead buyers of IT services to consider increasing their offshoring to lower-cost locations.

However, a prolonged recession would see non-critical projects being delayed and discretionary IT spending getting cancelled, according to a report from research firm Gartner Inc.

India is expected to continue being a dominant location for IT offshore services.

“Factors that will give India the edge over other offshore locations are scale and quality of labour.

North American and European buyers of IT services have been the force behind a growing offshore services market and India is central to almost any discussion of offshore services delivery for these buyers”, said Mr T.J. Singh, research director, Gartner. Ms Allie Young, Vice-President, Gartner, believes that buyers will be more aggressive with external service providers to have greater clarity on costs.

Moreover, clients will seek immediate savings from their offshoring vendors.

However, a prolonged recession in the US and possibly other global economies, will lead to some kind of cut in IT budgets.