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India-Canada spat not good for IT cos

No immediate operational disruption now, but it’ll affect deals in near future for Indian IT sector

Bengaluru: Indian IT services companies may face some delay in bagging new outsourcing contracts from Canadian enterprises that are currently under negotiation owing to the diplomatic row between India and Canada. However, experts opined that no operational disruption is likely to happen due to cancellation of visa processing by India of Canadian citizens.

“No near-term disruption to operations is likely as engineers’ movement is not likely to be impacted due to India’s decision to suspend visa processing. Most Canada-based engineers are PIOs (Persons of Indian origin), who are not affected by the visa suspension. Moreover, many Indian IT firms have large centres in Canada and the country has been leveraged as near-shore centre. These aspects are not going to change due to the diplomatic spat,” Pareekh Jain, an IT outsourcing advisor and Founder of Pareekh Consulting, told BizzBuzz.

India and Canada are involved in a diplomatic tit-for-tat cycle over the Khalistani issue, leading to fears of negatively impacting trade and investment between two countries. Most Indian IT firms have large centres in multiple Canadian centres as the country contributes around 4-5 per cent of total revenues of large IT companies, sources in the know said.

Infosys Public Services (IPS), a North America-based subsidiary of Infosys, announced the opening of its new subsidiary, Infosys Public Services Canada, headquartered in Ottawa, Ontario.Similarly, it had opened its digital centre in Calgary, Canada. Similarly, Wipro in January this year opened the Wipro-AWS Launch Pad Centre in Toronto, Canada.

Tata Consultancy Services (TCS) has partnered with Canadian business jet maker Bombardier, and Payments Canada.

Several large and medium enterprises have outsourced IT contracts to Indian IT firms, while many Canadian enterprises are operating their GCCs (global capability centres) in India. These companies are currently under wait and watch mode. “Many companies are in a wait and watch mode. However, the diplomatic spat has not impacted their operations in the near-term. But those deals, which are under negotiation among parties, are likely to face delays,” Jain said.

Sources in the know said if the diplomatic row lingers for months, then Indian IT industry is likely to be negatively impacted.

“Canada is always preferred as a destination for Indian IT firms due to easy visa processing and business-friendly environment. As visa processing has been difficult in the US during last 4-5 years, Canada is growing as a near-shore centre. If the spat continues, these obvious benefits will go away,” said an industry source.

Strong Ties

l Canada contributes 4-5%to total revenues of large IT cos

l Infosys Public Services opened its new subsidiary in Ottawa

l Further, Infyopened digital centre in Calgary

l Wipro has Wipro-AWS Launch Pad Centre in Toronto

l TCS has partnered with Bombardier and Payments Canada

l Several large and medium enterprises outsourced IT contracts to Indian IT firms

Debasis Mohapatra
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