After years of being blamed for job losses in the Western world, Indian high-technology companies and outsourcing firms are going through a downturn of their own. The global slowdown is forcing them to reduce hiring, freeze salaries, postpone new investments and lay off thousands of software programmers and call center operators.
While some industry insiders insist the financial crisis will benefit companies here, as Western businesses seek to cut costs by moving jobs overseas, right now the sector is gripped with an unfamiliar sense of uncertainty.
“It’s certainly not irrational exuberance,” said Nandan Nilekani, co-chairman of Infosys, one of the best-known technology outsourcing firms in India. “There is a lot of introspection about what does this mean and when does it end.”
The downturn is exposing a deeper concern: India has become the world’s front office, handling customer service calls, and its back office, helping to process payments and run accounting and other systems on computers. But it has not yet become the head office — making major new products, pioneering marketing techniques or helping to shape corporate strategy.
Rather than drowning American technology firms or work forces with a vast supply of cheap engineering talent, as some had feared, India — and Bangalore, its Silicon Valley — have continued to serve largely as the information economy’s version of manual labor.
“Historically, when it comes to innovation, Indian companies are relatively weak compared to the IBMs and Accentures of the world,” said Partha Iyengar, the head of research in India for the Gartner Group, which analyzes trends in the tech sector. “It has been their chronic Achilles’ heel.”
Terrorist attacks killed scores of people last week and brought Mumbai, India’s commercial capital, to a virtual halt. But long before that brutal shock, India had been suffering the effects of the global slump, losing capital as Western…