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US slowdown a boon for Indian IT sector: CII

While there was some concern in certain quarters about the US slowdown, an overwhelming response was that quite contrary to general belief, the US sluggishness will actually provide a great opportunity to Indian software and services companies, a study conducted by the Confederation of Indian Industries said.

India software and services sector comprises mainly of 'body shopping', maintenance projects and new/R&D projects. It is believed that the bigger Indian companies primarily engaged in maintenance work will not be affected in a major way, as maintenance of existing software and services would continue to be necessary. The volume of new and R&D projects will come down in the short-term, but only a few Indian companies service this segment of the market in the US.

'Body shopping' is likely to suffer with concurrent impact in the short-term. However, respondents felt that in the medium and long term the slowdown offered a great opportunity to Indian companies for moving projects to India - from onsite to offshore. US corporates looking to cut cost will find outsourcing their work to India attractive. This would ensure that exports from India may continue to grow.

The respondents felt that in order to facilitate the promotion of India as the preferred offshore site, the government may need to have a closer look at the areas of hindrance such as high communication costs and inadequate infrastructure, especially in the telecom sector.

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