Outsourcing is no more the same

With the US economy receding, there is an increased focus within firms to on cutting all kinds of spending. And outsourcing is no more the same as it used to be few months back.

The shares of Indian IT companies have plummeted as a result of this economic slowdown (partly due to appreciating rupee too). However, while IT spending is going to be cut to some extent by some companies, there will be others who would be looking to outsource more in an effort to cut costs. So, this will kind of balance out or maybe tilted a bit towards outsourcing. But note that here we have not considered those firms who have not been outsourcing. These are the 'rich' companies who have been against outsourcing. But now they will discover that outsourcing can be their savior in difficult times. Hence, they will be forced to outsource work to countries like India.

What does this mean for Indian IT companies?
1) Risk is spread better because number of clients will increase thereby reducing the dependence on a few clients.
2) Overall demand for outsourcing will increase, thereby propelling the growth of these companies further