India software giants wary of US slowdown

BANGALORE, India, Jan 20, 2008 (AFP) – India’s major software firms say a US economic slowdown may bring more customers seeking cost savings, but analysts warn that the once red-hot sector faces tough times in 2008.

Tata Consultancy Services (TCS), Infosys
Technologies and Wipro, whose latest earnings were hit by a sharp gain in the rupee against the dollar and the US credit crunch, expect clients to send more work to low-cost India even as they pare overall technology budgets.

Wipro, which reported fiscal third-quarter earnings on Friday, said most clients had prepared their 2008 budgets this month and that some had cut information-technology spending.

“But that does not automatically mean their outsourcing and off-shoring budgets are going to slow down,” said Girish Paranjpe, the executive who deals with Wipro’s financial services customers, its most lucrative clientele.

“Sometimes it gives more impetus — rather than less — to do more offshore,” he said.

Still, even if US clients farm out more IT work to India as they tighten spending, they would negotiate lower prices, which will dent the billing rates of software makers, analysts say.

“We are cautious about the outlook for the IT