{"id":142753,"date":"2025-11-19T09:51:09","date_gmt":"2025-11-19T09:51:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/142753\/"},"modified":"2025-11-19T09:51:09","modified_gmt":"2025-11-19T09:51:09","slug":"it-firms-rewriting-deals-to-factor-in-geopolitical-risks-in-permacrisis-age","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/142753\/","title":{"rendered":"IT firms rewriting deals to factor in geopolitical risks in ‘permacrisis’ age"},"content":{"rendered":"

IT companies are rewriting contract clauses to factor in geopolitical risks<\/a> as a major concern in new deals amid what analysts call \u2018permacrisis<\/a>\u2019 \u2013 a state of permanent uncertainty characterised by a continuous cycle of geopolitical disruptions.<\/p>\n

Existing geopolitical risks include the US administration\u2019s moves to hike H-1B visa fee<\/a> and impose a 25% outsourcing tax<\/a>, while the India-Pakistan tensions earlier this year had led companies to a point of invoking force majeure clauses<\/a>, industry experts said.<\/p>\n

\u201c100% of the client conversations we are having are wanting to prepare for these situations\u2026 In some situations, we have started calling it CAU \u2013 crisis as usual,\u201d said Jimit Arora, CEO of research firm Everest Group.<\/p>\n

These situations are occurring at a time when vendors are facing extreme cost pressures due to AI, he added.<\/p>\n

\"ImageETtech
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Companies are reassessing exposure and the theme of concentration risk has come back.<\/p>\n

\u201cConversations that once focused purely on cost, delivery and SLAs now include scenario planning for tariffs, labour mobility, and data residency,\u201d said Phil Fersht, chief executive of HfS Research.<\/p>\n

IT service providers \u201care adding clauses for geopolitical contingencies, dual delivery options, and cost adjustments tied to new regulations,\u201d Fersht said. \u201cThe result is a move from risk transfer to risk sharing<\/a>.\u201d<\/p>\n

Their clients, on the other hand, \u201care asking for automatic fee resets if laws change, and shorter pricing cycles instead of long 5-year blocks,\u201d according to Rahul Hingmire, managing partner at Vis Legis Law Practice.<\/p>\n

\u201cClients also want broader exit rights if geopolitical or tax changes suddenly make offshore work expensive. Some deals now require a full register of all AI-assisted processes,\u201d Hingmire said.<\/p>\n

He added that IT firms<\/a> are spreading delivery across India, Mexico, Canada and Poland to de-risk policy shifts.<\/p>\n

According to Everest, a H-1B visa fee hike could push annual wage inflation up by 6-8% while a 25% outsourcing tax under the HIRE Act may increase offshoring costs by 18-22%.<\/p>\n

To be sure, the HIRE Act, introduced by senator Bernie Moreno, is still at the proposal stage.<\/p>\n

\u201cContracts are the new risk maps,\u201d said Hardeep Sachdeva, senior partner at law firm AZB & Partners. \u201cForce majeure now covers geopolitical disruptions, indemnities are tighter, and clients demand transparency on subcontractors and data flows.\u201d<\/p>\n

Even ESG obligations are entering IT deals as part of global governance expectations, he added.<\/p>\n

Sachdeva warned that the legal complexity of contracts will escalate. \u201cIt will be interesting to see evolving jurisprudence with some of these contracts testing dispute resolutions and enforcements, since that too will require very savvy and developed judges and mechanisms,\u201d he said.<\/p>\n

Despite looming threats, mega deals (more than $500 million in contract value) momentum has picked pace in the second half of 2026.<\/p>\n

\u201cThe compression wave is happening right now due to competition, cost pressures, and consolidation, while the AI build growth will come through with a phase lag,\u201d Arora of Everest Group said. \u201cLarge deals aren\u2019t translating into net new revenue, they\u2019re simply redistributing existing spend,\u201d he noted.<\/p>\n","protected":false},"excerpt":{"rendered":"IT companies are rewriting contract clauses to factor in geopolitical risks as a major concern in new deals…\n","protected":false},"author":2,"featured_media":142754,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[138,219,96546,96542,38913,58812,111,139,69,96543,96544,96545],"class_list":{"0":"post-142753","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-force-majeure-clauses","11":"tag-geopolitical-risks","12":"tag-h-1b-visa-fee","13":"tag-it-firms","14":"tag-new-zealand","15":"tag-newzealand","16":"tag-nz","17":"tag-outsourcing-tax","18":"tag-permacrisis","19":"tag-risk-sharing"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/142753","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=142753"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/142753\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/142754"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=142753"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=142753"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=142753"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}