Trouble Looms for Indian IT Outsourcers

It’s a rough morning for the Indian IT outsourcing sector, which has been hit hard by a highly negative report from Wachovia analyst Edward Caso.

Caso says the group is likely to take another leg down, forecasting that April conference call season will see most of the companies issue guidance below Street expectations. He writes that “demand remains lackluster and decision-making slow.” Customers budgets are down 10-20 percent this year, he contends, but with many operating on a month-to-month basis and focused solely on cutting costs. Caso writes that he is hearing pricing has come down close to 10 percent, and that existing contracts are being repriced. He also says the sector is seeing increasing competition for deals from Accenture (ACN) and IBM (IBM).

Caso cut his ratings today on Cognizant (CTSH), Wipro (WIT), Infosys (INFY) and Syntel (SYNT) to Underperform from Market Perform. He also reduced EPS estimates for all four companies. Caso said the stocks could see another 15-30 percent decline from Friday’s close.

Read the rest of this post

Must-Reads from other Websites

Panos Mourdoukoutas

Why Apple Should Buy China’s Xiaomi

Paul Graham

What I Didn’t Say

Benjamin Bratton

We Need to Talk About TED

Mat Honan

I, Glasshole: My Year With Google Glass

Chris Ware

All Together Now

Corey S. Powell and Laurie Gwen Shapiro

The Sculpture on the Moon

About Voices

Along with original content and posts from across the Dow Jones network, this section of AllThingsD includes Must-Reads From Other Websites — pieces we’ve read, discussions we’ve followed, stuff we like. Six posts from external sites are included here each weekday, but we only run the headlines. We link to the original sites for the rest. These posts are explicitly labeled, so it’s clear that the content comes from other websites, and for clarity’s sake, all outside posts run against a pink background.

We also solicit original full-length posts and accept some unsolicited submissions.

Read more »