Oct. 11--NEW DELHI -- The US financial meltdown is beginning to bite the $50-billion Indian IT industry with experts saying that the crisis will have a lasting and potentially damaging impact.

The business process outsourcing (BPO) sector is also being hurt by a slowing business environment and expects further pain. Pricing pressures and reduction in volume of work are expected in the near future.

"The global financial meltdown following the collapse of US investment banks will have limited impact on the Indian IT sector in the short and medium terms, but poses a challenge in the long term," said Som Mittal, president of the National Association of Software and Service Companies (Nasscom).

"It is a cause for concern, not panic. The Indian IT sector is resilient to bear the impact of the turmoil. We need to wait and watch to find out how deep is the crisis. As we are part of the global world, we are bound to be affected by such events. Being an integral part of the delivery chain, we are vulnerable to things that happen the world over," Mittal said.

Last month's financial contagion that destroyed the US banking soon crossed the Atlantic to hit European banks hard. Financial services being the largest spender on technology are crucial to the bottom lines of Satyam Computer Services, Wipro, Tata Consultancy Services and Infosys.

For long now, the top Indian IT companies had relied on the Wall Street to build strengths, improve balance sheets, create a formidable talent base and drive up their share in the GDP to 5 percent. But clearly, the spectre of slowdown is staring at them.

Nearly two-thirds of the global IT business originates from the US. And over 40 percent of global IT revenues flow from the financial sector.

According to Mittal, the bulk of export earnings of Indian IT and ITes (IT enabled services) sector -- estimated to be more than $40 billion in 2007-08 -- is from the US which accounts from 60 percent of the business. Another 10 percent comes from Europe and the rest from Asia Pacific.

So the new realities are: slower business growth, erosion of profits, dip in exports and job cuts. Hiring plans are in for a halt and potential job losses could be in the range of 10,000 to 25,000. Also, Indian companies may not be able to meet the 2010 exports target of $60 billion.

Lavish spends are out for now, be it on travel or hospitality, as part of their new bailout package. A large part of US-based sales force is being recalled and the focus is to create structures that will generate new business.