US turmoil not to hit Indian IT firms: HCL

HCL Technologies, India's fifth largest software exporter, today said the current global financial slowdown does not pose a threat to the domestic IT companies this year and it is expecting an increase in number of deals from the cost-wary US firms.

"The US economic situation is now becoming worse than it was expected. However, this will not have much of consequences this year. Usually, we see more IT outsourcing deals in the October-December timeframe every year, and we are expecting an increase owing to the fact that companies will tend to outsource more owing to their effort to reduce costs," said Vineet Nayar CEO, HCL Technologies.

HCL, which derives close to 28 per cent of its revenues from the banking, financial and insurance services (BFSI) sector, had earlier stated that troubled investment banks Lehman Brothers and Merrill Lynch are not the clients of the company, and the tech firm does not see any direct impact from these US firms' financial troubles.

Merrill Lynch agreed to sell itself on September 14 to Bank of America for roughly $50 billion to avert a deepening financial crisis, while Lehman Brothers filed for bankruptcy protection and hurtled toward liquidation after it failed to find a buyer.

Speaking to reporters on the sidelines of an event conducted by the company here, Nayar said the economic impact on the financial slowdown may force global enterprises to reduce costs and cycle time (time to market). This is expected to lead to signing of more fixed-price contracts as this will benefit both the clients as well as the service providers in this difficult juncture.

"There are two options before the companies as they go for cost reduction. You can either reduce cost using pricing, which is not a good idea, or you can restructure the contracts to fixed price contracts. Therefore you can retain the margin and at the same time your customer can also get the benefit," he added.

Meanwhile, HCL has termed the news about the company planning to counter-bid UK SAP consulting firm Axon as 'speculation'.