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US slowdown: smaller IT firms more vulnerable than large peers (Live mint.com 28th Jan 2008) Even as India’s top 5 software service vendors such as Tata Consultancy Services Ltd (TCS) and Infosys Technologies Ltd say they don’t see a slowdown in demand for their services from buyers in the US, it is becoming clear that smaller vendors could see orders slipping if information technology (IT) spending by such clients is tightened in the event of a recession in the world’s biggest economy.
TCS, Infosys and their peers Wipro Ltd, Satyam Computer Services Ltd and HCL Technologies Ltd have said the credit crisis in the financial sector in the US, the segment from where the bulk of revenues come for Indian software vendors, had not impacted their revenues in the latest quarter.
The October-December earnings for the top 5 firms have been in line with analyst estimates and vendors maintained their operating margins through improved billing rates, higher offshore leverage, a shift towards fixed-price projects, new client additions, higher manpower utilization and lower attrition. It is early to gauge the business scenario coming off the US, but any budget cut will impact small and medium-sized companies the most, an analyst said. More
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