I think same thing is at play here otherwise how can you explain such a mad rush for Reliance Power IPO which does not have any power generation capacity at the momemnt or valuation of RNRL, noone knows what exactly they do.

That said, the challenges coming from smugness developed over years of sloth and easy money don’t go unnoticed. Now that they have a triple whammy – a weak dollar, rising wages and a worsening market sentiment that drives them southwards.

As you say the markets may have overdone it. But markets always forebode and factor in adversities early. When the event actually unfolds, it will be too late to recognize change. Taking a cue from the markets, India’s IT vendors had better pick up the slack now. This is what I think they should be doing if they have to outwit foreign vendors (operating from their own backyard) ;

-Get more stringent with delivery of SLA commitments;
-Develop domain consulting expertise, commit to deliver on ROI upfront;
-Embrace advanced technology that helps develop applications with fewer lines of code, reduce dependence on lateral hires;
-Get real on R&D spends - those figures in the balance sheets now look like mere rounding errors;
-Develop SaaS capabilities; alternatively innovate enterprise offerings so that they can be delivered at SaaS price levels;
-Don’t just spray paint innovation; make it a customer experience and see his delight;
-Use that cash hoard to acquire $$ assets / LOB expertise near-shore, especially since the $$ is weak;
-Get rid of that 25-30% margin fixation and pass on the benefit to many a battered clients in their time of crisis. They will remember you when the tide turns for the better.

Apart from financial sector other sector like health & banking are in good shape or they are also doing cost cutting.

What will be the most promising sector in USA at the moment for small outsourcing company?

Thanks for clarification on full-post feed. I guess 10 full posts on home page is not bad considering your blog is pleasantly lightweight.

I will refer you to an earlier post of mine here
http://6ampacific.com/2007/12/09/how-will-it-services-fare-in-the-coming-us-recession/

Re full post feeds, that’s what it used to be on 6ampacific, until Wordpress 2.1 (I am now on WP 2.3). I either have to show the full post on my home page or if I use the –more– tag it will truncate the posts in my feed as well. Given that many of my readers navigate through search or directly to my home page, it doesn’t seem right to have them load a page full of 10 long posts.

I did some research on this today and I may have a solution - a plug in called Full Text Feed from cavemonkey50.com.

How do you compare current tough times (for IT services companies) with the ones post-2001?

PS: Full-post feed would be much appreciated. Please.

* At least some years of struggle and investment in some intllectual property

* A maturity and ambition for future - despite the odds - that can leave any seasoned industry guy stunned. Global focus, going-IPO in 4-5 years, global talent hiring, deep branding, investment in leadership development, patents, global alliances, strong foothold in Indian domestic market…

* A focus on ‘emotional capital’ of its people - that is unprecedented leaving it with some very dedicated and skilled talent

Capital and guidance are the only two pieces these future stars hunger for.

One could argue that all of these are natural choices given the maturity of the industry, no shareholder pressure, scale of operations etc. And I am sure all of these will be true to some extent. But to me what is outstanding is that in the midst of this seeming inertia of ‘return on capital’ - there are these exotic islands for talent and capital emerging.

One of the greatest contribution this industry still has the potential to do is to keep inspiring as it does. Unfortunately, it seems others are learning from its mistakes faster than it does itself.