I think the HCL CEO got it wrong

I read in yesterday's newspaper that the HCL CEO, Mr. Vineet Nayar, has claimed that the present crisis will actually help India IT. That the present scenario will result in more outsourcing.

I don't see how a Wall St. meltdown is going to help Indian IT companies.

Recession ensures a cut down in projects that otherwise would have been in place. Many of the projects that start during normal period or during a boom is in hope. The idea behind projects is that the investment now will result in returns in the future and hopefully more than investment now. But during a recession, the "investment now" is hard to come by and no one is sure of the future. Hence a cut back in the projects.

Instilling confidence among consumers can bring a country out of recession. Increase the purchasing power of the citizens by giving them jobs and pump in money to support the local market to grow stronger - that is a way out of recession. Both these steps are anti-outsourcing. Outsourcing came about because of competition and the desire to drive down price to remain competitive. Not because of a bust.

I hope the HCL CEO is correct. I hope I got it all wrong. And perhaps US will come out of this phase soon. Seems like 1929 all over again, but the financial institutions have grown wiser (cross your fingers) and US will recover fast. US is by far the biggest consumer of software and of that goes into a recession for a prolonged period, every one will be affected.

But here is another scenario. USA bounces back before Europe slips into recession. Then USA would need to become competitive fast. Projects are announced. They would not have enough manpower to execute all the projects. USA comes to India and, well, everyone is happy again.