Technology Companies Feel the Heat of the Financial Crisis

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Oct. 24 – India's technology companies are feeling the heat from the global economic meltdown. "Our outlook is cautious in the near term given the extent of strain on the global economy," Azim Premji, chairman of Wipro Ltd. told the Wall Street Journal. Premji is pessimistic despite a sharp weakening of the Indian rupee, which helps tech companies that earn most of their revenue overseas.

A far cry from the 40 percent growth in revenues technology companies saw in the past few years, Tata Consultancy Services, India's largest IT company by revenue said revenue growth fell to 25 percent. Wipro's revenue on the other hand rose 36 percent on a year to your basis.

Going forward, it's a different picture. "The way I see it, the next two to three quarters will be marked by delays in decision-making on the part of clients," Abhiram Eleswarapu, an IT services analyst at BNP Paribas told Forbes. He is forecasting sales growth for the large players in the sector to fall to 15 percent this fiscal ending March 2009–from 35 percent a year ago.

India's booming outsourcing and technology industry is feeling the brunt as the financial crisis which has put a stranglehold on banks and financial institutions, some of the outsourcers' largest clients takes its toll.

Technology companies are lowing their revenue targets for the year as well as reducing the rate of recruitments. Infosys recently lowered its outlook for revenue this year from US$5 billion it said it expected to make in July to US$4.75 billion for the fiscal year ending March 31, 2009.

In a similar vein Hyderabad based Satyam Computer Services Ltd. said it cut its recruiting target by a third to 10,000 new hires this year.