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Indian outsourcers will be hit by US financial crisis

John Ribeiro | Sept. 26, 2008
U.S. financial sector crises will affect Indian outsourcers, say analysts and a trade body.

Investment banks that survive will want to offshore more to get higher cost benefits, Rajpal said. However, investment banks do not ship work offshore in as large volumes as retail banks and other retail financial services companies, he said.

The common view is that companies send more work offshore in times of crisis, to take advantage of lower costs in India and other locations. "We do expect that a tightening of budgets in the U.S. will lead to more work being sent offshore to India," said a Nasscom spokeswoman.

The problem this time is that a lot of the customers of Indian companies like Lehman Brothers and Merrill Lynch will not exist anymore, Apte said.

The impact of the crisis on Indian outsourcers will last for at least another three to four years as the financial services sector goes through a major restructuring, Apte said.

 

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