After the economic downturn, it’s the drums of war. The worst is not yet over for the information technology (IT) firms. As there are indications that the war in Iraq may last longer than the US-led forces initially thought, it’s uncertainty once again in Sector V in Salt Lake, the hub of IT activities in the state.
With stock indices around the globe taking a beating and consumer confidence hitting a new low, the firms have slipped into a wait-and-watch mode. So, it’s time to scale down projections and take a cautious approach before executing expansion plans.
“Economic downturn was bad enough and now, there’s war. It’s disturbing,” says Arindam Mukherjee of Alumnus Software. He feels his company, which specialises in broadband technology, will not encounter problems in the shorter run, but a longer war may hurt business.
There are companies that are already on the receiving end. “We were in the final stages of signing a contract with a US-based agent for some off-shore projects. But following the developments in the Gulf, the decision on off-loading the project was deferred indefinitely,” says Joydeep Mukherjee of Cogentech, a fledgling company, which operates from the Infinity building in Saltlec (Salt Lake Electronics Complex).
And for such small and medium companies, the war is a major concern as, already, some of the key sectors of the US economy — travel, retail and hospitality — have been hit.
Probir Dasgupta of Vision Comtech admits his firm is having to scale down growth projections for the next fiscal. E-Force, another Saltlec company, which was in the midst of finalising a major expansion plan to convert the city office as the hub in the Asia Pacific region, has also decided to adopt “caution” for now.
“The plan still holds. But the war is a setback, as we know that we will have to spend more for the IT infrastructure,” points out Sudipto Ghosh, technical director of the company’s Asia Pacific operations.
And apart from the lost opportunity of new business acquisition, the companies are also apprehensive that the tension will trigger stricter travel norms, which will hit the “free-flow” of techhies to on-site projects.
“Though 70 per cent of our projects are executed off-site, the projects require regular on-site visits. Visa restrictions in the wake of the war is, indeed, a serious concern,” says Siddhartha Mukherjee, vice-president, Cognizant Technology Solutions, one of the biggest IT companies operating from Salt Lake.
The silver lining — many believe that in case the coalition forces pull off an early victory, the war may haul the US economy out of recession. “It’s all linked to expectation. In the post-war phase, if people start spending more, the multiplier effect will positively help the IT companies here,” sums up Bikram Dasgupta, of Globsyn Technologies.