The US economy crisis and the Software Industry

Started with the news about Lehman Bros ant Merryl Lynch, US financial market has been in unprecedented turmoil in the past few days witnessing bankruptcy, mega-take over and US government bail-out of an insurance company. This turmoil has directly impacted spending in the US financial sector and is likely to create a downstream impact on other sectors of the US economy and worldwide markets.

I feel we are just starting to see the downturn and as time goes by we will be getting more worse effects.  Since most of the top tier companies have a substantial portion of their revenue comes from BFSI, which is the sector where problems are surfacing so badly, the  next few months will be terrible for the industry starwalts.

I got one interesting post publishing what country leaders had to say on this.



UK: " The UK market is in turmoil as like US it has been hit hard with the fallout in the Financial Market. The ripples of which can be seen in other sectors too and as surely the UK market is slowly slipping into recession . The retail market and housing market has slowed down considerably. The mortgage market is just flat as only 50 products are available in contrast to 500 available same time last year. Unemployment has gone up. Immigration laws are been revamped for skilled IT workers effective 01 Nov 08. There are more emigration ( people leaving) than immigration.  

The impact can be seen in the IT sector as demands for new hire are decreasing. The contracting market has slowed down as projects are been frozen , however the demand for contractors are still there as companies are rather comfortable with contractors rather than hiring. The rates are been negotiated harder. 

I personally think that this current scenario is an opportunity to market and scale up our offshore offerings both as Recruitment support and development projects."

USA :"We were here and building a T&M company during the early to mid 90's during the recession. Typically we found out that the projects and capital expenses are put on hold. Companies also let go of people and hire short term contractors.I feel that the T&M requirements will go up and specifically for the current as well as a bit of old technologies. I checked with Kevin and as of now the requirements have not slowed down.

 At least in the US I think the market has hit the bottom and should stay more or less constant."


Australia : " Offshore opportunities will increase specially for Application Development and maintenance"


India : "Due to layoff, more experienced resources will be available in India . Opportunities in India locally are mind boggling and this is a good time to focus on India as a market place."


Middle East :" Local demand is quite robust, however decision making will be delayed and time for closure will go up significantly".

On the whole, we feel that we are in recession already and it is time to tighten the belts , drop costs,focus on productivity and look at opportunities that typically surface during recession.

Please share your thoughts on this.

Thanks