RSSCan Indian IT Services Companies Keep growing ….?
SeekingAlpha has a post providing 3 key challenges Indian Outsourcing companies are going to face starting 2009,
End of the Tax Shelter:The biggest advantage Indian IT companies have is the tax shelter provided by Indian government. This is the reason INFY's tax rate is below 10%. This tax shelter is supposed to go away in 2009.
The second concern is the dollar to rupee conversion rate. Since the beginning of the year, 1USD has fallen from Rs 43 to Rs40.If the trend continues then by the end of the decade the dollar should be around Rs 35.
Inability to increase the number of employees at the present pace: INFY's strength in 2002 was 10,900. It grew to 52,700 by 2006. This amounts to 49% annual growth. This growth has fueled the company's rise in revenues from 555 million in 2002 to $2.1billion in 2006. If INFY wants to grow at this pace, then its employee strength should be 141,000 by 2009, 275,00 by 2011, 500,000 by 2013 and 1 million by 2015.
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Love that last statistic: 1 M employees by 2015. Soon, they will be a country, not a company.