Impact of stagflation on outsourcing from India

As the world plunges into a renewed stagflation with Gold making 17 year high and western economies failing to keep up with the inflation, Indian outsourcing sector is going to take a major hit.

The stagflation in western economies will eventually take its toll into India and China as the outsourcing will dry up and the West will slowly close its door to these extra jubilant economies.

U.S. President George W. Bush told a U.N summit on Wednesday he was willing to drop all trade barriers if other countries did the same, issuing a challenge that could invigorate critical talks on world trade.

Trade experts saw little chance of the pledge becoming a reality but some said the attention Bush gave to trade in his speech could spur interest in the World Trade Organization talks on trade and development, known as the Doha Round.

But the stagflation will kill the international trade initiatives, experts say. Stagflation makes all poor. Countries become increasingly protective and eventually close doors to foreign goods and services. Investments slow down as the rich hide behind the escalating precious metal prices.

Indian outsourcing sector will collapse in two to three years. The BPO and Information Technology companies will first get wiped out then they will reinvent themselves to do business within India and China.