Earlier, media across the globe had reported the IMF saying that the US would likely suffer a sharp economic downturn, or even recession, judging by the impact of similar banking crisis around the globe over the past 30 years. The IMF has in its latest report said the risk of recession is higher when financial turmoil is preceded by rising house prices and rapid expansion of credit, which was the case in the United States.
The IT professionals in India said that since it is a global village that we are living in now, no country can escape any kind of a global trend.
But the fact that the Information Technology and software firms across the globe are more integrated than any other industry, its effect would be more on them, they added.
"We are living in a global economy, so, obviously, any positive things happening globally will have positive impact on our industry. Anything that is negative ought to have a negative impact on our economy also. IT industry being integrated with global industry, I am sure there will be some ripple effect happening in IT industry in India," said Radhakrishnan Nair, Chief Executive Officer (CEO) of Technopark.
After several years of a housing boom, the US economy has been shaken by a banking crisis that began with a spike in defaults among the riskiest mortgages and spread to Wall Street, marking the worst financial crisis since the Great Depression.
And with experts saying that slowdowns or recessions preceded by bank-related stress tend to last longer than the normal, salaried employees are now left wondering how they would cope with the rising interest rates and the lack of liquidity in the market.
"The main impact is how much our interest rates are going up as far as house mortgages are concerned, the more the interest rate and with the freeze in the salary. We will not be able to pay our monthly Equal Monthly Installments and that could have a direct impact on having defaulted on payment and when there are too many defaulters in the market, it would indirectly effect the banks," saidanjit Darwin, an IT professional.
Industry sources say that India has set a software export target of around 60 billion dollars by 2010 and their ability to insulate themselves from the global crisis would affect the future growth of the IT industry.