Double dip recession positive for IT outsourcing

November 9, 2011: Possibility of a double dip recession cannot be unseen taking in to consideration the economic crisis that is going on in Europe as well as United States of America. Even though these countries are trying to survive from the economic downturn with the help of bail out plans, it will help only to a certain extent and is not going to help for a complete recovery. The fact is that the Indian IT as well as BPO sector is about to benefit with the recession with increasingly pressurized companies abroad trying to establish a base in India by outsourcing their work to the Indian market owing to its cheap labor availability.

Even though there had been a steep decline in the transaction volumes for the quarter in both the IT as well as BPO sector by 7 and 12 percent, the fact remains that the average contract value for the BPO had seen a steady increase of over 50 percent where as the IT sector saw a growth of 14 percent. This is directly proportional to the Billion Dollar deals that the companies in both BPO as well as IT sectors have signed so far. There are industry analysts who claims that a second recession will lead to layoffs whereas most of the Industry analysts says that a second recession will pave the way for more outsourcing to emerging markets like India by the foreign companies which in turn will increase the possibilities and employability for the job seekers in India.

A research that was conducted by HfS Research has claimed that almost a whopping 61 percent of the outsourcing providers as well as 44 percent of the analysts believes that an economic downturn will increase their revenues in next six months which in facts shows the positive note that the industry is assuring especially in the IT as well as BPO sector. Only six percent of the outsourcing providers has claimed that the revenue would decrease if incase an economic downturn happens.

The increasing cost pressure at the time of economic downturn or recession is expected to outsource the overseas jobs especially in the IT as well as BPO sectors to the emerging countries like India. The developments that again reassure the positive picture in the outsourcing area is the establishment of new locations by the outsourcing providers that includes 10 new locations by technology major Hewlett Packard as well as four new locations by Dell. Tech Mahindra as well as Convergys is about to open three new centers.

The demand as well as employment opportunities in the IT as well as BPO sector is always going to be positive even if the Double Dip Recession happens across the world and the main factor for increased Outsourcing remains to be the cheap labor that is available in India. And this is what turns out to be a win-win situation for both the outsourcing service providers as well as the job seekers.

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