The $110-billion ITES and BPO sector in India will not be immediately impacted by the U.S. government shutdown, as the majority of its business is with the private sector, NASSCOM observed

The Information Technology (IT) industry in the State is keeping its fingers crossed as the U.S. federal government shutdown has approached the one-week mark, hoping that there will not be any direct and long-term impact on its fortunes.

The industry seems to be falling back on a NASSCOM (National Association of Software and Services Companies) assessment of the situation.

The $110-billion IT services and BPO sector will not be immediately impacted by the U.S. government shutdown, as the majority of the business that the industry does is with the private sector, NASSCOM observed at the start of the shutdown.

Hrishikesh Nair, chief executive officer, Infopark Kochi, did not see any major impact on the IT industry in the State from the first Federal government shutdown in America in the past 17 years. “The number of companies directly engaged with the Federal government is very minimal in the State and across the country. Therefore, the impact is also likely to be minimal,” Mr. Nair told The Hindu.

Gigo Joseph, CEO, SmartCity Kochi, echoed a similar sentiment. “Apart from some possible visa restrictions that may affect the movement of staff, there is unlikely to be any serious impact. Of course, the industry will begin to feel the heat if the shutdown continues for a prolonged period,” he said.

Weakening dollar

G. Vijayaraghavan, member of the State Planning Board and an IT expert, also expected little impact on the State IT sector. “There is the possibility of the dollar weakening and it is good for the country as a whole and it goes to the IT industry as well,” he said.

Mr. Vijayaraghavan dispelled the notion that a surging dollar was good for the IT industry, arguing that any such rise was evened out by corresponding rise in costs.

Sanjay Vijayakumar, chairman of the board of governors of Startup Village, felt that there is no need to press the panic button as the impact is at worst going to be short term. “The drop in IT spending will have a short-term effect on the prospects of the industry here. However, it is expected to bounce back within six to nine months,” he said.

Asked whether the shutdown will further fuel the anti-outsourcing sentiments in the U.S., eventually leading to job cuts here, Mr. Vijayakumar said such a threat was there even before.

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