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IT firms plan to survive slowdown

Bipin Chandran

Indian software companies, confronted with the US slowdown, are reworking their strategies to stay afloat.

NIIT, the Rs 12.37 billion Delhi-based IT company which issued a profit warning recently has decided to concentrate only on large clients and resolve to just-in-time hiring. However, the company has not yet decided on cutting its service charges.

"To contain the impact, we are putting into action a set of strategies aimed at intensifying business acquisition, cutting overheads and resorting to just-in-time hiring," the company spokesperson said.

NIIT is also cutting down fresh hiring of software professionals for specific projects and instead has decided to retrain the existing staffs so that they can handle new multi-pronged technologies and projects. Says the spokesperson: "With this move we expect to bring down our costs and overheads."

Another Delhi-based IT firm Velocient Technologies, is following a different game plan.

It is looking at clients in Europe and Asia Pacific regions so that its dependence on the US market is reduced.

" We are looking at other markets which include Europe and Asia Pacific region to minimise the impact of the US slowdown".

To keep out of water, Velocient is also planning to shift its business model from executing orders on site to offshore work.

"This will help us in reducing cost as we do not have to set up an on site development centre which costs money in the US" said a company executive.

The company has also decided to go for requirement-based hiring instead of recruiting people before a project order besides increased focus on out-sourcing.

Even hardware companies like Conexant Systems are facing the impact of the slowdown.

The company is likely to shut off its manufacturing facility consequent to the economic slowdown. According to Adesh Kapoor, country manager Conexant Systems, "Conexant has been affected by this downturn and is taking concrete steps to reduce the impact. There is a strong possibility that our manufacturing facility will be shutoff for two weeks during the next quarter."

Conexant is also expecting a lower sales revenues in the last quarter. Others like J K group-promoted J K Technosoft, have decided to diversify their technology base.

"We will not depend only on one technology, rather we will concentrate on multiple technologies so that even if the jobs based on one technology comes down we will not be affected," Satish Gupta, managing director of the company said.

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