A couple of hours after I finished writing the post below, another perspective came to my mind which made a lot of sense and was in a way a little contrast to what I had written in that post! But then again, I believe, some perspective is better than none!
In the post below, I mentioned that the growing IT/ITES/BPO/KPO market in India is mainly thanks to the growing developed nations like US and developed part of EU and that now that when the developed nations are showing slowing growth or stagnation, this will directly impact the growth of the IT/ITES industry in India.
However, when I thought about developed nations stagnating or growing slowly. I instantly thought the margin pressures that these developed nations will immediately face due to the recession. These margin pressures will in-turn enforce cost-cutting and efficiency improvements in the companies, for which I believe they will again turn to comparative-low cost and knowledge-based economies like India.
This will lead to more offshoring of activities with focus to improve efficiencies. Again, the amount of this offshoring will be not a very impactful size as the unemployed in those developed nations will also be utilized at a low-cost to generate the same efficiencies.
I have been meaning to write this post as soon as I wrote the earlier post of "At the mercy of developed nations", however my laziness took over me. I saw an interview with Stephen Roach, Chief Economist, Morgan Stanley on TV yesterday where he mentioned a similar perspective, which reminded me to put down my thoughts here.
More offshoring - Bring it on! Right guys? We can take on some more of US depending on India to save some of their losses :)
But considering the entire corpus/size of offshoring is likely or logically should go down if US hits recession, I would still think that the net effect would be a slight reduction in offshoring.
Saturday, November 3, 2007
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