ECONOMY-INDIA: IT Firms Face Up to U.S. Slowdown

By Ranjit Devraj Reprint | | Print |

Ranjit Devraj

NEW DELHI, Apr 2 2001 (IPS) - Though not affected much by the slowdown in the U.S. economy, India’s famed computer software exporters are taking no chances.

The National Institute of Information Technology (NIIT) — one of India’s top IT (information tecnology) companies — has announced that it will now limit its 300 million-U.S. dollar business to large clients.

The company will hire only when absolutely necessary, said a company spokesman.

Leading global computer chip manufacturer Intel, which announced 5,000 lay-offs this year, said it would bring about manpower reduction in its India operation through “normal attrition” — meaning that personnel leaving the company would not be replaced.

Cisco Systems, another global IT giant with a growing presence in India, said there would be no lay-offs in India.

However, Cisco has postponed fresh appointments for its research and development centre in the southern city of Bangalore — the centre of India’s IT export boom.

“We have also created an awareness within the company to restrict expenditures in view of the slowdown,” said a company spokesman.

According to V. Makar of a career consultancy firm, which helps recruit IT professionals, demand for recruits from international IT companies, has dropped by 60 percent.

“We no longer can accommodate all the people coming to us with the best resumes,” he said.

A study released Monday by the Information Technology Association of America, noted that demand for IT workers in the United States fell by 44 percent in the past year due to the slowing down of the economy and a surge of entry-level workers into the industry.

Latest U.S. Immigration and Naturalisation Service (INS) statistics show only 16,000 requests in February for H1-B visas by foreign IT professionals seeking to work in that country.

This represented a sharp drop from the 30,000 applications received in January and 53,000 in December 2000. Newspaper reports from the United States spoke of hired, foreign IT professionals being “benched” or asked to wait till they could actually take up their new jobs.

At least 1,000 IT professionals are due to return to Bangalore from the United States because of the economic slowdown in that country.

Indian IT companies are now adopting strategies like diversifying their product range and putting more emphasis on ‘offshore’ work that can be done in India rather than send workers to onsite work in the United States.

Another strategy is to intensify the search for markets in Europe and the Asia-Pacific region.

Indian computer software companies are now taking a second look at the ‘green card’ scheme introduced in Germany in August 2000. Some 1,105 Indian IT experts have taken advantage of the scheme so far, according to New Delhi-based Indo-German Chamber of Commerce.

Language and cultural problems have been cited as a reason for the reluctance of Indian IT experts to accept job offers in Germany and countries like Japan and South Korea.

Indo-German Chamber of Commerce director, Ajay Singhal says Germany needs nearly 100,000 IT specialists and the new scheme will allow 20,000 non-European foreigners to work in Germany over the next five years.

Indian IT giants like Infosys, based in Bangalore, are now even beginning to look at low-tech ‘backroom’ operations like international telephone answering services and medical transcription.

Relatively low-paid, these jobs can be performed by people with no IT skills.

Infosys chairman Narayana Murthy said recently that there was a need to “broaden the base of technology” so that jobs could be generated for people lacking IT skills.

Despite the U.S. slowdown, Murthy expected backroom operations conducted in India to generate 800,000 new jobs and earn 17 billion dollars in revenue by the year 2008.

“As companies cut spending on new computer systems, Indian software producers cannot expect not to be pinched, but routine work like processing of insurance claims and taking doctors dictation would still have to go on,” says Sanjeev Kapoor, who runs a company that provides such services.