Indian IT Firms Cutting Billing Rates At Unprecedented Levels - InformationWeek

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IT Leadership // CIO Insights & Innovation
Commentary
6/30/2009
01:14 PM
Bob Evans
Bob Evans
Commentary
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Indian IT Firms Cutting Billing Rates At Unprecedented Levels

Indian IT services firms have been cutting their rates by 35% or even 40% as global clients continue to look for ways to reduce costs in the global economic downturn. The depth of this latest round of rate cuts is "unprecedented," according to an industry expert based in India.

Indian IT services firms have been cutting their rates by 35% or even 40% as global clients continue to look for ways to reduce costs in the global economic downturn. The depth of this latest round of rate cuts is "unprecedented," according to an industry expert based in India."In certain projects the billing rates are down to $16 an hour, which analysts say are the lowest-ever rates," says the Economic Times of India. "And such rates will continue at least till Q1 next year, they add."

At offshore advisory firm Tholons, CEO Avinash Vashisth said he's never seen price cuts this severe: "The last month or so has seen unprecedented cut in billing rates even for existing customers," Vashisth says in the article. And the impact is reaching even the top-tier Indian services companies such as Tech Mahindra and Infosys, the article adds.

Well, well - this could make things very interesting. If it's truly the case that rates are being slashed more deeply than ever before, then it's likely that more U.S.-based companies will give greater consideration to engaging with offshore suppliers to take advantage of this newest round of cost savings.

But this comes in the midst of a political kerfuffle here in the U.S. over President Obama's view of "our jobs" and his efforts to influence legislation that will increase taxes on profits that those companies earn outside this country. That will be an intriguing balancing act: watching the United States Congress attempt to save "our jobs" by making it significantly more expensive for companies to do business in this country.

As noted a few weeks ago, Microsoft CEO Steve Ballmer says that type of "our jobs" legislation will have an immediate and profound effect - the problem is, that outcome will be the exact opposite of what the Obama administration is seeking with its Rube Goldberg-style attempts to define and circumscribe "our jobs" in a global economy.

Microsoft already has 40% of its global workforce based outside the U.S., and Ballmer says he'll simply shift more of Microsoft's positions to other countries whose tax burdens are significantly less onerous than the United States' are now, and far less onerous than they'll be if the dangerous conceit about "our jobs" turns into actual legislation.

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