The US economy has been bad since  summer 2008 and its turbulence has been felt world over. What started  with the housing subprime mortgage has spread out lavishly to the  financial markets and taken the whole economy for a downfall. As  industrial production declines, unemployment rates have shot up in  the United States. And it has continued to affect the Indian  industries as well. Almost 60 % of the total business of Indian IT  and Outsourcing industry comes from the US and the UK and therefore  any tumults in those economies reflect with proportional ripples  here. The whole global economy has been shaken because of the  same.
   
  Here are some of the potential effects that may be seen  in the Indian IT and Outsourcing industry as a result of US economic  slowdown:
 
  Downfall of IT and Outsourcing Industry
  The  IT Outsourcing boom has created a buzz in the Indian economy. Jobs  were created, unemployment rates declined, IT salary increased along  with cost of living, real estate prices soared and so on.  Consequently it even raised the outsourcing costs of the western  companies. But because of inflation and tight monitory policies,  Indian economy has slowed down and as a result IT industry has taken  a downward slope. IT salaries are expected to reduce and consequently  take down with them the outsourcing costs of US companies. However,  the declining rate of Indian currency will attract more western  investors to the outsourcing sector.
 
  Decline in  Outsourcing Deals
  The elections are heating up in the US. Add  to it the economic turmoil and outsourcing deals are all ready to  take a backseat. US companies wouldn’t favor offshoring jobs to  other subcontinents in such a scenario. However, it can be hoped that  with the end of elections, the negative attention towards outsourcing  comes to an end too and business picks up as earlier.
 
  Shift  in Quality Tasks
  Indian outsourcing industry was making a  progressive advance towards more quality oriented business operations  and climbing up the value chain. The BPO sector was making a shift in  terms of value addition towards KPO. And KPO itself was diverging  towards complex operations like equity research, insurance  underwriting, financial analysis etc. however, considering the  current economic conditions this shift has become a little  difficult
 
  Marketing Services Beyond US
  The slowdown  in US economy is making it necessary for Indian companies to look for  business opportunities outside US in countries of Asia Pacific,  Europe, Africa and Middle East.
 
  Mergers &  Acquisitions
  The economic conditions have led many investment  banks to convert themselves into commercial ones. And this will be  followed by more mergers and acquisitions of financial institutions thus resulting in strained IT budgets. As a result profit margins of  IT outsourcing companies can dip significantly. In addition smaller  outsourcing companies that cannot withstand the pressure of falling  US economy will merge in with bigger industry players.
 
  Decrease  in Employee Attrition Rate
  Due to the global economic slow  down, US companies will reduce IT outsourcing. As a result of reduced  business, Indian outsourcing companies may take to reducing the  number of employees in order to balance the low demand figures. This  may even lead to employee lay offs for the bottom performers.
 
  Maneet Puri is the director of LeXolution IT Services, a leading IT outsourcing company in India. His company offers a range of web solutions and KPO services including contact database building, mailing list development and virtual assistance services.