As the crisis widens in the US, the companies, including outsourcing units and IT enties that heavily depend on their overseas clients for getting their revenues, may get affected in days to come. The subprime crisis may lead to a slowdown and then to a recession in the US economy.
In case it happens, the chief technical officers (CTO) of US-based companies, having their back-office operations in India, will be compelled to lower their budget, which will further have a cascading impact on Indian companies. The good part of the story is that unlike China, which had an export oriented economy, the Indian economy was based on the domestic market
In case it happens, the chief technical officers (CTO) of US-based companies, having their back-office operations in India, will be compelled to lower their budget, which will further have a cascading impact on Indian companies. The good part of the story is that unlike China, which had an export oriented economy, the Indian economy was based on the domestic market
The Indian economy has grown at more than 9 per cent in 2005-2006 and projections indicate robust performance in the coming years. India’s exports may record a decline if the US slows down. In 2006, roughly 18 per cent of India’s exports — about 15 per cent of India’s GDP — was directed to the US. The negative impact can be partly offset by exports of services.
As the US slows down, an effort to reduce costs could boost outsourcing of services. The IT sector has made and will make impressive strides. Possible setbacks from weakness in capital spending in the US may be insignificant. On the financial side, equity markets have posted losses and are likely to move in tandem with events in the US. The Sensex for instance posted declines in 2001 when the US was in a recession. Institutions in India holding US mortgage-related securities are likely to suffer losses. the spill-over effects of the US financial crisis to the Indian economy may not be significant enough to overwhelm the positive economic momentum already in place.
As the US slows down, an effort to reduce costs could boost outsourcing of services. The IT sector has made and will make impressive strides. Possible setbacks from weakness in capital spending in the US may be insignificant. On the financial side, equity markets have posted losses and are likely to move in tandem with events in the US. The Sensex for instance posted declines in 2001 when the US was in a recession. Institutions in India holding US mortgage-related securities are likely to suffer losses. the spill-over effects of the US financial crisis to the Indian economy may not be significant enough to overwhelm the positive economic momentum already in place.
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