BPOs unfazed by slow IT growth in US

Growth rates of IT companies in US will drop from seven per cent in 2005 - 06 to just two per cent in 2007, claims US based analyst firm Forrester in its report released a fortnight ago. However, IT companies in India believes that India would continue to get a benefit of low costs and companies will invest more and more money to network their offices.

Siddarth Pai, partner and head of TPI India, a management advisory firm focused exclusively on sourcing alternatives for business support functions, said that the Forrester study was correct.

"Forrester expects to see a sharp drop in consumer spending in 2006 or 2007 due to worries over interest rates, energy costs and a potential drop in the housing market while the drop in growth rate may divert investors to India because India is low cost location," said Pai.

He said China would also benefit. According to Pai, western world may face reduction of spending in IT industry.

"But in India, both IT as well as BPOs will gather more spending and industry will boom," said Pai. It is a normal cycle in US where in IT the growth rate slows down and in India it is continuously increasing so for next few years it will keep on climbing, claimed Pai.

Dishant Sagwaria, CEO of Ahmedabad Stock Exchange Capital Markets Limited said that in India, the scene would be different.

Growth of IT industry in India was driven by cost solution. So even at time of recessions, IT companies would be booming, he said. In India, IT companies and BPOs will rise and spending will increase, added Sagwaria. "We cannot co-relate two different markets," said Amit Gupta, Asia Pacific Solutions Group, Intel.

"IT and BPOs in India has a very bright future while companies in US are stable and have started expanding branches across the world," said Gupta.Chirag Mehta, CEO and MD of Icenet, said the IT industry in India was booming but growth in US companies would not slow down.

Mehta said US companies were outsourcing in India and this would help that company make more money in the USA.

Growth in US will not slow down as outsourcing helped units reduce cost and improve margins, claimed Mehta.

"BPOs in India and IT companies in US are interrelated and so they both have to grow," said Mehta.