With the recent drop in the economies of the U.S. and Europe, the Indian IT sector seems to be falling on hard times. The U.S. constitutes almost 60% and Europe almost 20% of the sector’s revenue, thus any drop in those economies could hit the sector worldwide. 

 

IT stocks have been the worst hit since the U.S. ratings downgrade. The BSE (Bombay Stock Exchange) IT index has observed a drop of 11% last week. Companies like HCL Tech, Infosys, TCS and Wipro were most affected and dropped by 5-6%.  The main reason for this being that the IT companies in India are export-oriented and are hugely dependent on U.S. markets, thus any negative news from there ultimately affects the IT stocks in India.

 

When the last recession hit the U.S., the IT sector was the first to get blown away by its effect. The Indian IT sector was badly crushed and IT stocks dropped. Many reputed IT companies lost big during that time. It was mainly because at that point the Indian Market was not prepared for any such effects. But the question arises: are we prepared now? Do we have good strategies and plans to tackle another crisis? Will those strategies or plans prove successful?The recent drop in the stocks is just a warning of what can strike in the coming months. Let’s hope that the IT sector in India is better prepared with more powerful strategies to overcome any sort of crisis- either big or small- and does not have to suffer like when the last recession hit.