Fast-forward two months: it's time for them to eat their words. Neither are customers outsourcing more nor is the industry growing any faster. In fact each day service providers only revise their growth estimates in the downward direction.

Some brave analysts are finally coming out with the truth. Days after Wall Street's collapse, vice-president and principal analyst with US research firm Forrester, , said the scale of the crisis had rendered , released earlier this month, redundant, and that Indian IT providers should prepare for slower growth and lower profits. "It is naive to say an economic slowdown is good because cost-cutting will lead to higher offshoring. This is no longer a recession, it is fundamental restructuring of financial services that is taking place," says McCarthy.

What the hell happened in these two months?

Multiple factors are at play here-some recent developments and some historic issues that have been building over time.

About 20 percent to 40 percent of the revenues of offshore outsourcing firms are tied to the financial services industry. With its collapse, companies have been forced to look to other vertical markets. In normal circumstances, that should have been enough to offset the revenue erosion. But the problem is, that everyone is in the same boat and those other industries are also impacted by the crisis, fading consumer demand and reduction in spend.