The slowdown in the US economy has had its effect on stock markets in India. It is also supposed to affect the IT sector, which has been a major contributor to the Indian economic growth of late. There are also reports that major IT companies are laying off hundreds of its employees. In the wake of these developments, V Balakrishnan, Chief Financial Officer, Infosys Technologies, spoke to T R Sathish Kumar of  Deccan Herald. He allayed fears that the US slowdown would really affect the IT sector in India. But he agreed that it will have some short-term implications on the industry, which can be overcome.

Deccan  Herald: There are reports that there is a slowdown in the US economy. How far is it true that it will affect the Indian IT sector adversely?

V Balakrishnan: Sure, the slowdown in the US economy will affect us. But only in the short-term. There is some uncertainty among the IT-related companies in India as their major clients are the US companies. There is immediate reduction in the spending patterns of the US companies over IT-related  activities. But in the long-term, it will be beneficial for the Indian companies. Due to the slowdown in the US ecOnomy, global companies would be under pressure to cut costs and become efficient. Hence they will tend to offshore more and that could be beneficial for Indian IT services companies. So it could be more beneficial for Indian companies, most of whom are offshore players.

DH: Does the move on the part of some IT companies to lay off a substantial chunk of its employees reflect on the crisis in the industry?

VB: The laying off of employees in companies has nothing to do with the recession in the US. It is a regular phenomenon. It depends on the performance of the employees. It is very necessary for companies to get off non-performing employees to excel in the chosen field.

DH:  What is the scene on the recruitment front?

VB: There is no change on the recruitment front at all. In fact, there has been a drastic increase in the offers being made by IT companies in India. Last year Infosys made 12,000 job offers on campuses for freshers.

This year we have made 18,000 campus offers. The situation is almost the same with almost all companies.

DH: What are the steps that can be taken to tackle the prevalent situation?

VB: The share of Indian IT services’ revenues is just five per cent of the global IT services spending and there are enough opportunities for growth available for the industry. There is 95 per cent of the market to be tapped. It can be done competitively. We have been working on it constantly.

DH: Are you also looking at newer markets for sustained growth?

VB: Yes, there has been an incremental growth in the IT sector in European countries and some Asian countries like Japan. We are looking at them with hope. There is no need to depend only on the US economy. But it takes time. We already have our facilities in Japan. One-and-a-half per cent of our revenues comes from Japanese clients. There is a lot more scope to expand and grow there.

DH: How do you look at the IT sector in the domestic market?

VB: There has been 8-10 per cent growth in the IT sector in India. There is a constant demand from the goverNments. Apart from that, many Indian companies have now become multinationals. As part of their exercise to become efficient, they would outsource services. So there is tremendous future in the domestic market too.