Oct. 02--NEW DELHI/BANGALORE -- Top Indian software exporters, including Tata Consultancy Services Ltd and Infosys Ltd, that have federal and state government contracts in the US are unlikely to suffer any major loss of business due to the US government shutdown, experts said.
On 30 September, Democrats and Republicans in the US Senate failed to agree on a funding measure for the healthcare legislation, Obamacare, leading to the government's first partial shutdown in 17 years.
Top Indian software firms have government contracts in the US, especially in the healthcare sector, but are unlikely to feel any impact of the development if the situation is resolved within a month, experts said.
"It is a temporary hiatus," said Sid Pai, partner and president, Asia Pacific, at outsourcing advisory firm ISG. "The US government will go back to spending soon. Moreover, for the Indian heritage IT firms, it won't have any huge impact."
While a spokeswoman at TCS said there would be no impact of the US government's shutdown on the company's business, HCL Technologies Ltd and Cognizant Technology Solutions Corp. declined to comment on the development.
Infosys also declined to comment due to the mandatory silent period before its second-quarter results announcement on 11 October.
"The impact will be negligible," said Sudin Apte, founder and chief executive of outsourcing advisory firm Offshore Insights. "They (Indian IT firms) don't have too many sizable contracts with the US government. It won't have any material impact."
In June, Infosys' US subsidiary was awarded a one-year $50 million contract by the US district of Columbia to develop its health benefit exchange.
"A majority of the business that our industry has is with the private sector, and is not directly dependant on federal spending. Hence we do not see an immediate economic impact," industry lobby Nasscom said in a statement. "If, however, the shutdown continues for an extended period, there will be an overall macroeconomic impact that may affect the industry. Some services such as visa processing time that depend on federal budgets are expected to see delays."
Ankur Rudra, vice president, Ambit Capital, agrees with the industry's assessment. "Most of these companies work with private sector in the US and with governments in countries like India and the United Kingdom. But it can have a second order impact if the US industry is hurt in case the shutdown continues for a longer period," Rudra said.