How will the slowdown in the U.S., affect India’s IT industry? Abhishek says it needs to ‘pause, reflect and realign strategies’:

Technically, it might not qualify as a recession, but according to Warren Buffet, “by common sense definition”, the U.S. economy already is in a recession.

A December, 2007 report on the Indian tech sector by Morgan Stanley says the uncertainty in the United States may delay tech spending in the first half of 2008. Margins are already under tight pressure due to the weakening dollar. With Indian IT salaries rising 10-15% a year, the overall operating margins have been reduced to 6%. The major crisis in the US financial markets has had a ripple effect on all sectors and it might be a while before things start looking up. As Lakshmi Narayanan, Nasscom chairman and V-C at Cognizant said , “The current situation is not temporary. It is the new baseline. The industry will have to learn to operate under the new parameters.” Anecdotal evidence suggests that fewer development projects from existing clients are coming through. The sales cycles have increased and winning new customers has become increasingly difficult.