In an article published today on Live Mint (a Wall Street Journal blog), the somewhat confusing reports of (a) a drop in outsourcing business, and (b) a record quarter, are rationalized.

Siddharth Pai, TPI's manager of India operations, pointed out that much of the work that has accounted for a the record quarter was related to non-discretionary projects like application maintenance, not new initiatives.

Also, Avinash Vashistha, CEO of Tholons, pointed out that the "impact of the slowdown will be there all through 2008, considering it's an election year in the US." he went on to say that "[a]s any offshoring contracts or significant layoffs become very visible in an election year, customers are going slow with their decisions."

But there may be a silver lining behind these rather somber reports. Projects in the technology and outsourcing space have a history of being deferred and delayed, but rarely vanish. With this backlog in demand, the outsourcing and technical services world can look at 2009 with cautious optimism, both because of the floodgates being lifted and because of many companies' inability to meet such demand internally.