Boeing has stopped the production of 737 max Jets with effect from January 2019. This has created a big business concern for most of the major Indian IT firms. According to the reports, TCS, Infosys, HCL and L&T Technology have clients which are directly or indirectly connected with Boeing. These includes clients from various core domain like engine manufacturers, body suppliers, avionics etc. As a result of this, the major IT firms have direct exposure to Boeing and the halt of 737 production has hit business of close to $1 billion across these companies.
The future of the contracts is at stake since the 737 Max was grounded in March after 346 people were killed in two crashes.
Boeing 737 Max Jets Crisis: Shares of major IT companies have seen a downslide
Due to this crisis, it being believed that contracts worth $1 billion are on the verge of termination. These contracts mostly involve Indian IT firms. As a result, the shares of these firms were trading lower on Friday. TCS was down by 0.6%, HCL down by 0.14%, L&T saw a decline of 0.27% while Infosys was down by 0.1%. Boeing shares also feel by 6% intraday in New York on Thursday.
Boeing figures on the top ten list of many Indian service providers. Hence these companies will definitely be affected. This crisis is not only impacting the Indian IT firms, it is also going to impact he overall aerospace sector. The worldwide aerospace engineering outsourcing market is estimated at around $4 billion per year which is almost equally shared by Boeing and Airbus. Of the $2 billion of Boeing business, Indian IT firms gets almost half of the business every year.