‘Economic unpredictability’ making local software companies uncomfortable

Economic uncertainty around the world is reminding information technology (IT) firms of the financial meltdown that was triggered by a few banks going under in September 2008.

Speaking on the sidelines of the launch of  Leadership@Infosys, Kris Gopalakrishnan, chief executive officer of Infosys Technologies, said he was uncomfortable about “unpredictability in some economies.”

The Infy chief said even as the industry was “positive” about the current fiscal, people were worried about the “domino effect”, the weak nations could have on business around the world.

The lingering “unpredictability” as western economies try to put their finances in order was also giving tech companies the jitters.
He likened today’s uncertainty to the environment in September 2008.

“In fact, this is very similar to what happen in that one week of September 2008, starting September 15, when (crisis hit) a couple of banks - one went bankrupt … other acquired ... It (financial meltdown) had a domino effect and the whole economy went into a tailspin. That is what people are worried about. That (domino effect of economies failing) is predictable,” he said.

Gopalakrishnan said the recent cap on UK visas was a natural outcome of the high unemployment rate in that country.

“It’s not surprising. Most countries which have unemployment today are looking at some kind of cap for increasing visa costs and that is a challenge we all have to face. There is also unpredictability around it because you don’t know which way it’s going to go. We are looking at the situation and we are working through the government and industry bodies to get our point of view across.”

He said spiralling unemployment in these economies was more to do with overall slowdown in economic activities than outsourcing. “I strongly believe that most of the unemployment is coming because of reduction in construction (activities), retail moving to online— so there are less number of provision stores, and manufacturing moving elsewhere. Overall economic activity has come down. Outsourcing is probably one of the small reasons.”