Rising costs and falling demand hit technology boom in India

[OhioChick]

January 22, 2008

India's outsourcing sector is suffering on two fronts: the threat of a recession in the United States has reduced demand for corporate IT upgrades; and the steepest rise in the value of the rupee in three decades has weakened the country's cost advantage.

The decison by Lehman Brothers, the Wall Street bank, last week to close an India-based mortgage capital division sent shivers through the sector, with executives fearing that the sub-prime mortgage woes had reached Indian shores.

It came as four of the largest Indian IT companies - Tata Consulting Services, Infosys Technologies, Wipro, and HCL Technologies - reported average sales growth for the third quarter of about 21 per cent compared with more than 50 per cent a year earlier. For the three months to December, they posted average net profits growth of about 18 per cent, the lowest since 2001.

The rupee gained 12 per cent against the dollar last year and Indian IT companies also had to contend with double-digit wage inflation.

http://business.timesonline.co.uk/tol/business/markets/india/article3227827.ece

:nopity:

[Skittles]

1. GOOD / nt

[Yael]

2. Good. Now maybe the damn jobs will come back home once they take

into account spiraling costs to go along with the timing and customer service satisfaction issues.

[OhioChick]

3. Don't Count on It....

There are plenty other third world countries to exploit.

[Yael]

4. Sadly, you are spot on.