The global economy has been going through a phase of slowdown. The financial crises have only added to this slowdown. Reigning high crude prices, escalating costs and fears of recession have cast a cloud of uncertainty over the IT spends of clients. Given such a backdrop majority of the brokerage houses are advising investors to shift their portfolio to large cap stocks due to the following reasons:
- Clients would go in for vendor consolidation. This would benefit large companies (the big companies are among the top three to four vendors for most of their top clients).
- IT budgets are expected to remain flat as compared to last year, but as expected offshoring to increase, which would benefit the larger players the most.
- The bigger companies have the scale and the management bandwidth to withstand a period of flattish growth in revenues. Also, they have greater flexibility in managing client’s accounts.
- Larger companies with a wider base of customers will be relatively less impacted by lack of spending by a particular client unlike mid or small tier companies who are more dependent on single clients.