Indian IT stocks fell after Canada-based telecom company Nortel Networks filed for bankruptcy. Nortel was an important outsourcing client for major Indian IT firms like TCS, Wipro, Infosys, and Sasken. Sasken was expected to be hit hardest as Nortel owned shares in the company and was a top client. Indian IT stocks declined significantly on the news, with TCS, Wipro and Infosys all down over 4% and the overall IT index down over 5%. The Nortel bankruptcy demonstrated how integrated the Indian economy is with the global economy.

1. Nortel bankruptcy pulls down Indian IT stocks
Mumbai, Jan 15 : Indian IT firms received another jolt Thursday when Canada-
based Nortel Networks, one of North America's largest telecom equipment firm
and an important client for outsourcing firms here, filed for bankruptcy.
Among the biggies of Indian outsourcing firms that are expected to bear the heat of the
development are Tata Consultancy Services (TCS), Wipro, Infosys and Sasken
Communication Technologies, industry sources said.
These companies, however, declined comment on the Chapter 11 bankruptcy filing by
Nortel, citing client confidentiality agreements.
Sasken, particularly, is expected to be the worst hit as Nortel holds a 9.33 percent stake
in the company, apart from being a top client. The filing led to the Sasken scrip losing
over 16 percent at the Bombay Stock Exchange within hours of trading Thursday.
quot;India will have to face adverse effects of globalisation now that we have enjoyed the
fruits,quot; said Jagannadham Thunuguntla, head of the capital markets arm and director
of a major share brokerage firm, the New Delhi-based SMC Group.
The losses of other companies that count Nortel as a client were not as much, signifying
that the revenue stream may not be hugely affected, analysts said.
The TCS stock was trading 4.67 percent lower over its previous close. Wipro and
Infosys were also down by 4.49 percent and 4.7 percent respectively. Overall, the IT
index of the Bombay Stock Exchange was down 5.33 percent about half-hour before
close.
quot;This shows that Indian companies are as integrated to the world economy as their
global counterparts and again has blown holes into the de-coupling theory propagated
by a lot of people,quot; Thunuguntla told IANS.
Nortel remains a big name in Corporate Canada, with 32,000 employees and major
operations in Ottawa, considered the country's high-tech hub. The employee headcount
fell from an high of 90,000 employees in 2000.
A Nortel India spokesperson declined comment on the issue.
Nortel's business has been experiencing a slowdown in many of its major markets,
especially in the US, resulting in the company to send out a warning that its revenues
were under pressure.
The company had recently acquired Tasman Networks in India to strengthen its

2. research and development efforts in the country. The laboratory was since renamed
Tasman Networks Nortel Technology Excellence Centre.
Some of Nortel's clients in the country include Reliance Infocomm, Bharat Sanchar
Nigam Ltd, Bharti Airtel and GAIL (India).