Checking the Expiration Date on India’s STPI

More companies are starting to look at the back of their India-based outsourcing agreements to assess what impact March 31, 2009 will have on their business.  This is the date that the Software Technology Parks of India (STPI) tax break is scheduled to expire, a 10-20% development incentive program designed to foster net-new growth across the country.  

For those who are interested, I’d call your attention to two fantastic blogs that are examining the impact of this pending expiration in further detail:

1. Phil Fersht’s Horses for Sources questions how such a sudden increase in costs would impact and Indian outsourcing industry, or if, in fact, the Indian government will heed the cry of industry and extend the STPI.
2. Tony of 360 Vendor Management emphasizes the need for buyers to start planning for the real fiscal impact of such changes within their vendor agreements.  

Both touch upon an issue that Inflexion is increasingly concerned about, vendor sustainability, and how buyers assess current and future risks associated with their most deep and meaningful relationships.  Follow the advice of Phil and Tony and stay educated, start preparing for scenarios which represent likely outcomes, and communicate with your Indian partners on a regular basis.  One year is a very short period in today’s environment and the STPI expiration may arrive sooner than you think.

Let’s keep the conversation going.