31 Aug 2007, 0047 hrs IST,AFP
BANGALORE: Indian outsourcing firms nervously hope the US loan crisis does not deteriorate as the business of processing mortgages in their biggest market dries up and some clients keel over.
Firms like iGate Global Solutions and WNS that serviced American mortgage lenders are already feeling the impact of the crisis, which a US survey called the biggest short-term threat to the world’s largest economy. India’s outsourcing industry is now worrying about the crisis impact and a possible slowdown in US economy on technology budgets of banking, financial services and insurance clients that farm out work to India to cut costs.
“The impact is now limited to individual companies that had a reasonable amount of mortgage servicing business,” said Kiran Karnik, president of Nasscom. “We are hoping that it will blow over soon, but if the ripples travel to other areas of the US economy, it could be bad for the industry,” Karnik said. Processing loan mortgages during the US housing boom was a profitable line of business for pure-play outsourcing firms that logged 47% growth to Rs 20,900 crore in revenue during the year to March.
“In the US, sub-prime loan originations have almost ceased and consequentially the demand for origination services has dropped,” said N Ramachandran, CFO at iGate Global Solutions. LINK