Indian IT Cos Feel The Heat Of US’ Cost Drive

Firms like Accenture, McKinsey & other consultancy firms, SaaS companies like Salesforce and others are expected to see project and subscription cancellations in coming days

Bengaluru: The ongoing cost cutting measures taken up by the Trump administration to reduce unnecessary expenditure of the US Federal government is likely to have some second order impact on Indian IT services providers.

According to industry experts, Indian IT firms may see adverse impact on their healthcare vertical as many of them have exposure to Federal projects in this vertical. They, however, noted that Indian IT firms don’t have much exposure to most Federal projects due to domicile requirements.

“Global IT firms, SaaS companies, & consultancy firms have high exposure to Federal projects in the US. All consulting companies have huge exposure to US government. Fortunately, Indian companies don’t have much exposure to US government projects. But global IT firms (like Accenture, IBM) have substantial engagement with the government. So, the cost cutting by DOGE (Department of Government Efficiency) may have adverse impact on these global firms,” Pareekh Jain, an IT outsourcing advisor & Founder of Pareekh Consulting, told Bizz Buzz.

Indian IT firms may see some second order impact on the healthcare vertical as any cut in expenditure in this sector will affect projects adversely, Jain said.

Under the Trump administration, DOGE has been created under billionaire entrepreneur Elon Musk to reduce unnecessary government expenditure incurred by various departments & agencies of the US government.

Some of the cost cutting moves of DOGE have already created a controversy as the department has come up with radical plans to reduce headcount in various public sector agencies.

DOGE now claims it has slashed $65 billion from federal spending - a sharp increase from its previous $55 billion figure. As part of the crackdown, Musk had also directed federal employees to email his office with five tasks they completed the previous week to justify their positions.

Sources in the know said that global IT firms Accenture, IBM; SaaS companies like Salesforce, UiPath; consultancy companies like McKinsey and many others are likely to see project and subscription cancellations in the coming days.

Meanwhile, after DOGE’s access to healthcare department of the US, charges of corruption in the system have come to the fore. DOGE Subcommittee’s first hearing has seen huge scale of improper payments and fraud in the Mediclaim and related domains. Sources in the know said that such charges if proved true, will see expenditure cut, which will affect the technology service providers at the end.