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Software: An unpleasant opportunity?

Sep 12, 2001

Software stocks have opened at significant lower levels due to the events in the US. Undoubtedly, the concern is due to the fact that most of these software companies’ export oriented and the dominant destination is the US. While it is too early to put a number to the economic consequences of the cowardly acts of terrorism, there are concerns that that the US economy might enter into a recession. The fears are that if the US economy slips into a recession, the IT budgets of the corporates could be further hurt. This in turn would lead to a decline in sales for the Indian software industry. Consequently, these companies not being able to meet their growth targets for the fiscal FY02. This has led to the panic selling in the stocks.

Even though there may be some near term impact, over the next few months the situation should stabilize. The WTC towers were home to many large corporates from the financial services industry. The extent of the damage to these organisations is not imaginable but, surely, the spirit remains undeterred. Even as these organisations prepare to cope up with the physical and emotional toll the resolve is to get back to business as fast as possible and prove to those responsible that these inhuman acts of violence are meaningless.

As the organisations get back to business they will need to get back the infrastructure in place. And this would include the IT infrastructure. The Indian software industry would be a more than obvious choice for this job. This is because firstly the software companies offer the whole range of services, end-to-end solutions, for the IT infrastructure. And secondly many of these companies are clients with Indian companies.

While things are pretty uncertain at this stage, what is sure is that America will get back to business. The Fed has said it is ready with the money that will be required. And the Indian software industry should be ready to do their bit to prove that when it comes to the race against time they are the best.

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