Eco conditions in US could hit clients' IT budgets: Mah Satyam

Says the situation may also likely to present new growth opportunities

PTI | August 10, 2011



IT company Mahindra Satyam on Tuesday said the uncertain economic conditions in the US could impact clients' IT budgets in the near-term, but the situation is also likely to present new growth opportunities.

"I can't anticipate exactly what the impact would be. There may be some reactions in the short-term and there could be some budget squeezes. I am a strong optimist and I believe that to some extent, it will be to our advantage in medium term," Mahindra Satyam Chief Executive CP Gurnani said.

He expressed confidence that companies would continue to look at outsourcing work. "The private sector in the US is doing very well and they are not dependent only on the US market. So, from that point of view, we believe that whenever there are challenges, they have to relook at their own models," Gurnani said.

The downgrade by credit ratings agency S&P last Friday, has triggered concerns that the USD 60 billion Indian IT services industry -- which gets more than 60 per cent revenues from the US market -- will be hit. Software industry body Nasscom yesterday said it does not expect any impact of the global economic environment in the near term and that the sector will "sail through" the crisis.

Gurnani said the company's customer-centric model of co-innovation, co-sourcing and global delivery centres, would play an important role in helping the company grow in these times. He said despite the ongoing crisis, the US market still continues to be attractive and the company is strengthening its presence in the geography.

"The US market contributes around 50 per cent of our total revenues and we have recently hired a fair number of consultants, sales managers and technical managers based out of the US to further strengthen our market reach," Gurnani said.

IT companies are facing a string of concerns including, debt crisis in euro zone nations, inflation at home and currency fluctuations. Other large players like Tata Consultancy Services, Infosys and Wipro have also exuded confidence in overcoming the uncertain economic situation.

"We do not see any material impact from the sell-off in global markets. We are watchful of the evolving global situation but do not see any changes in the business demand environment in North America and Europe," TCS CEO and MD N Chandrasekaran said. TCS is India's largest software exporter.

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