India-Canada Rift Risks IT Deals and Business Growth

09 Sep, 2024

India-Canada Rift Risks IT Deals and Business Growth

Experts in the IT industry are raising concerns about the impact of the deteriorating relations between India and Canada on Indian IT services companies. According to a report by Financial Express (FE), the recent suspension of visa services for Canadian citizens by the Indian government could hinder Indian IT firms' ability to secure new business. If the situation remains unresolved, public sector clients may shift away from Indian companies.

Peter Bendor-Samuel, CEO of Everest Group, expressed that while the current situation represents only a mild frustration, it could escalate, initially impeding Indian firms from winning new deals and eventually prompting those with ongoing business to consider relocating operations. Joel Martin of HFS highlighted that the suspension of visa applications for Canadians will likely disrupt the flow of talent between the two countries, affecting Indian IT services companies that work with both public and private organizations.

Martin also noted that while existing offshore arrangements might handle the current challenges, some Canadian public sector firms might seek alternatives to ensure continued access to talent. Canada accounts for 5-6 percent of revenue for Indian IT companies, with major firms like Tata Consultancy Services (TCS) and Infosys recently securing significant projects in Canada. Infosys Public Services launched Infosys Public Services Canada to accelerate digital transformation in Canadian public sector organizations, while TCS formed a strategic partnership with Payments Canada to modernize payment systems.

The strained relations between India and Canada intensified when Canadian Prime Minister Justin Trudeau accused the Indian government of involvement in the assassination of Sikh separatist Hardeep Singh Nijjar. The Indian government has dismissed these allegations as unfounded and motivated. In response, both countries have expelled senior diplomats and India has temporarily suspended visa services for Canadian citizens.