Even though the Indian Government seems to be defiant regarding the Dubai crisis, the Indian IT majors have started considering it as an ominous sign. It is true that Dubai World, the emirate’s investment firm is looking for more time to repay more or less $60-billion debt, and all these have discouraged India’s top tech firms to a large extent. They have the fear that West Asia market for outsourcing, known for vigorous financial activities till the other day, can enter a long-drawn-out recession and customers in other top export markets of the US and Europe may apply more caution while making outsourcing decisions.
It is to be noted that Indian IT majors like Tata Consultancy Services (TCS), Infosys Technologies, Wipro, HCL and Patni Computer Systems have efficient divisions for serving telecom, banking and other customers in the West Asia region. Dubai, the biggest commercial hub in the region, did perceive home prices drop steeply by almost half from 2008 levels, reflecting the worst real estate slump during the global recession. This happens to be the appraisal of Deutsche Bank AG.
Now among Indian companies, while Wipro considers Qatar Petroleum and Road and Transport Authority of Dubai among its top customers, TCS serves Saudi Telecom. Domestic rivals Mahindra Satyam also looks at Dubai Municipality and National Bank of Dubai among its key customers in the region.
On the word of Anand Sankaran of Wipro, the crisis was not wholly surprising for the reason that reports of people in Dubai abandoning their cars in airports owing to the economic slowdown have been around for 9-12 months. “To mitigate this risk, we started looking outside Dubai,” he said. Wipro’s IT business in the West Asia is around $80 million and its Dubai business is 15-20% of it.
The situation is grave, if truth be told.
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