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Vishwanath Kulkarni

BANGALORE, March 20

SOFTWARE services vendors are concerned over further delays in ramp-ups and business flows if the Iraq war prolongs, as they fear US corporations would withdraw into a spending shell, crimping future growth for them.

However, a short war would fail to have any significant impact on the outsourcing model, albeit a few hiccups, if travel advisories are issued.

Mr Ravi Ramu, CFO, MphasiS BFL, said: "If the war is quick and clean, I don't see any impact over the next 2-3 quarters. If there is a prolonged war, there could be some impact on the industry. However, I personally believe that the modern warfare may not last long."

Expressing similar views, Mr S. Janakiraman, President, MindTree Technologies, said that a prolonged war could have serious repercussions.

With the war having begun, clients, especially the US-based ones, are unlikely to take any risk by travelling overseas. There have already been some corporate advisories against travel. As a result, we see decision cycles at the exploratory stage getting elongated," Mr Janakiraman said.

"The hesitation over travel has already set in among several clients over the last few days; we already have one customer from Japan postponing visit. We expect that cancellations could start from here onwards."

However, MindTree is planning to make proactive client visits in various markets in order to maintain continuity.

"This is likely to have cost implications as travel costs are expected to go up. Moreover, there could be cancellation of some Atlantic flight schedules from the US and this could result in increased fares," Mr Janakiraman said.

Mr Vivek Paul, President and CEO, Wipro, had recently stated that client concerns were less this time compared to the ones witnessed during the Indo-Pak conflict and that a short-term conflict was unlikely to have any impact on the company's business. An Infosys spokesperson declined to comment citing quiet period.

"This war is likely to result in cost pressures in the US, which should help us," Mr Ravi Ramu said, adding that spending on infrastructure was likely to go up post-war.

Mr Anand Mutalik, COO, Kshema Technologies, said that the IT sector had seen some recovery over the last 3-6 months but with the Iraq war, it seems to be heading for another downturn.

"Some of our customers are preferring to wait and watch how things shape up before deciding on anything," he said, adding that the company has not witnessed any kind of project cancellations or postponement of client visits.

"We are in constant touch with our clients and are providing them with some kind of assurance."

The company plans to send a group of senior professionals and group heads on client visits. "However, we fear that some clients could put a freeze on their expenditure," Mr Mutalik said.

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