Indian outsourcers say business as usual 

Since they depend on the U.S. market for over 70 percent of their revenue, India’s software services and business process outsourcing (BPO) companies get jittery when there is a terrorist attack or an economic slump in the U.S. Indian hi-tech leaders however, are saying that the U.S. attack on Iraq does not have them overly concerned, as long as it does not provoke a prolonged war.

“If the war is short, by which I mean under four weeks in duration, then the impact on Indian technology companies would be no more than a blip,” said AshokSoota, president of the Delhi-based Confederation of Indian Industry (CII), and chairman and managing director of MindTree Consulting, an IT services company in Bangalore. “If the war does last longer, then there could be a great deal of uncertainty in the global markets which could affect Indian companies, though the way the markets are reacting, there seems to be the perception that this war will be of a short duration.”

Indian companies could get marginally affected by a short-duration war in Iraq if customers postpone their travel to India because of the war, according to Soota.  During wartime or when there are threats of terrorist attacks, Indian technology companies find it difficult to close business deals as their customers in countries like the U.S., Europe, and Japan are wary of travel abroad. “We had a Japanese customer canceling a visit for instance,” Soota said. “So you may see a small, temporary impact on orders, though not on billings by Indian technology companies.”

However, many Indian BPO and services companies have not yet felt the impact of the slowing down of business travel. “The war with Iraq has not led to large-scale postponement of business visits to India,” said PrakashGurbaxani, chief executive officer of TransWorks Information Services, a Mumbai-based BPO services company. “We have customers from the U.S. who have been at our facilities for the last one week, and they have not made any change in their travel plans because of the war with Iraq.”

Indian industry insiders pointed out that a few hours after U.S. President George W. Bush announced that war with Iraq had started, Scott McNealy, CEO of Santa Clara, Calif.-based Sun Microsystems arrived in India on Thursday for a three-day visit to India to woo Indian software developers, universities, and researchers to embrace its Sun ONE (Open Net Environment) and Java platforms. In addition, Dell CEO Michael Dell was in Bangalore on Wednesday to visit the Round Rock, Texas, company’s global customer-support center in the city, and Infosys Technologies, a Bangalore-based software services provider.

“All this suggests that everything is going on as usual, despite the war.” Gurbaxani said.

If the war with Iraq is prolonged, however, new contracts could be affected, according to RaviRamu, chief financial officer of MphasiS BFL Group, a software services and BPO operation in Bangalore.

“Besides being hesitant to travel, customers in countries like the U.S. and Europe may be hesitant to hand out work across the world, and that may delay deal closure,” Ramu added. “This would be driven by sentiment, rather than by economic realities or any hardnosed business decisions.”

The view in Indian industry that the war with Iraq will not impact Indian technology companies significantly reflects the confidence among Indian technology companies that the benefits of outsourcing to India are well proven. “India is an imperative, and not a choice for U.S. and European companies,” said Ramu. “U.S. companies have to get competitive, and outsourcing to a location like India is a critical component of that strategy.”

The U.S. government will be doing its best not to destabilize U.S. business during the war with Iraq, according to Gurbaxani. “In a free market, outsourcing to India is an integral component for U.S. business, as we have already seen so far,” Gurbaxani added.