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GM, Chrysler crisis spells trouble for Indian IT
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By Carazoo
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GM, Chrysler crisis spells trouble for Indian IT
The U.S. auto industry problems involving General Motors and Chrysler Motors could affect Indian IT companies in a big way. That has made many Indian IT majors are edgy about loosing big contracts.
The biggest IT vendors Tata Consultancy Services (TCS), Wipro and Satyam Computer Services are some of the big companies who have GM and Chrysler on their client list.
Together, GM and Chrysler outsource $ 200-300 million U.S. dollars (nearly Rs 1000- Rs 1,500 Crore) worth of projects to India. The cancellation or withdrawal of these projects will hit revenues by 20-25 percent for these vendors.
Last year in April, Chrysler had offered Rs 600 Crore ($120 million U.S. dollar) project to TCS for application maintenance and support services. This is apart from another contract worth Rs 500 Crore( 100 million U.S. Dollars) awarded to the same company in February. In addition to this TCS had also bagged a project of another Rs 500 Crore (100 million U.S. dollars) from General Motors in the same year.
General Motors is among the top TCS clients and totally these two auto manufacturers account for 2-3 parent of its revenue, say market analysts. After the boom in car industry in late 90's, this sector was a major focus for Indian IT majors who ere involved in the manufacturing process. The automobile industry accounted for 10.5 percent of TCS in the fiscal year of 2008-09.
The deepening crisis co
uld affect Indian Inc. in a major way, affecting their yearly results. TCS has already admitted to that its performance could go weak with the continued uncertainty.
Another Bangalore based IT-firm Wipro is also likely to face the heat, as GM accounted for revenue of 30 million U.S. dollars every quarter. GM has signed 300 million U.S. dollars worth five year deal with the company in 2006. It also handles other projects of GM from Bangalore.
GM is also on top of the client list in Satyam. General Motors is present in though its brand Chevrolet. Analysts say that in short term projects may be suspended. A definite shape may be seen only after the crisis has depleted and new managements are in place. Te outsourcing will be back in place. Whatever sops governments pay to these companies, the pressure of delivering cheaper cars is high priority for all companies. However, it remains to be seen if the new beneficiaries will be MNC companies like the IBM.
Further, Indians need to know that filing for bankruptcy does not mean that the manufacturer is closing down all operation, In the United States, companies file for bankruptcy to ask the local government to step and manage its creditors. But for that companies have to agree to certain conditions laid down by the government, which may or may not be beneficial to the company. Further developments will take time and IT vendors should be ready to weather it out.
As cars get more computerized with newer technology, Indian IT companies will not run out of work.
The biggest IT vendors Tata Consultancy Services (TCS), Wipro and Satyam Computer Services are some of the big companies who have GM and Chrysler on their client list.
Together, GM and Chrysler outsource $ 200-300 million U.S. dollars (nearly Rs 1000- Rs 1,500 Crore) worth of projects to India. The cancellation or withdrawal of these projects will hit revenues by 20-25 percent for these vendors.
Last year in April, Chrysler had offered Rs 600 Crore ($120 million U.S. dollar) project to TCS for application maintenance and support services. This is apart from another contract worth Rs 500 Crore( 100 million U.S. Dollars) awarded to the same company in February. In addition to this TCS had also bagged a project of another Rs 500 Crore (100 million U.S. dollars) from General Motors in the same year.
General Motors is among the top TCS clients and totally these two auto manufacturers account for 2-3 parent of its revenue, say market analysts. After the boom in car industry in late 90's, this sector was a major focus for Indian IT majors who ere involved in the manufacturing process. The automobile industry accounted for 10.5 percent of TCS in the fiscal year of 2008-09.
The deepening crisis co
Another Bangalore based IT-firm Wipro is also likely to face the heat, as GM accounted for revenue of 30 million U.S. dollars every quarter. GM has signed 300 million U.S. dollars worth five year deal with the company in 2006. It also handles other projects of GM from Bangalore.
GM is also on top of the client list in Satyam. General Motors is present in though its brand Chevrolet. Analysts say that in short term projects may be suspended. A definite shape may be seen only after the crisis has depleted and new managements are in place. Te outsourcing will be back in place. Whatever sops governments pay to these companies, the pressure of delivering cheaper cars is high priority for all companies. However, it remains to be seen if the new beneficiaries will be MNC companies like the IBM.
Further, Indians need to know that filing for bankruptcy does not mean that the manufacturer is closing down all operation, In the United States, companies file for bankruptcy to ask the local government to step and manage its creditors. But for that companies have to agree to certain conditions laid down by the government, which may or may not be beneficial to the company. Further developments will take time and IT vendors should be ready to weather it out.
As cars get more computerized with newer technology, Indian IT companies will not run out of work.
Tags & Keywords : Cars In India, General Motors, Auto Manufacturers, Car Industry, Indian IT