Kris Gopalakrishnan, the Infosys chief executive, has an office planted in the middle of the Indian IT industry's version of the Garden of Eden.

The foliage found in the company's 300-acre Bangalore campus is aggressively green. The lounging monkeys appear well groomed. Under a flawless azure sky, 18,000 young (average age 26) and seemingly innocent computer programmers cycle between meetings where they solve the software problems of the world's biggest companies before squeezing in a lunchtime round of volleyball or honing their putting technique on the company's pristine green.

Even the janitors are beaming. As well they might. "Several have made thousands of dollars out of stock options", says Narayana Murthy, the Infosys chairman who is also the company's chief mentor – a role that makes him responsible for the Tigger-esque levels of enthusiasm sported by the workforce.

The question now being asked, however, is whether in the wake of US downturn this Eden is heading for a fall. Will the subprime snake sully the Indian dream?

In Building No1, in Infosys-embroidered shirtsleeves, sits Mr Gopalakrishnan, one of seven co-founders who set up the company, now worth $30 billion, in 1981 with a $250 loan.

As chief executive of one of India's largest software exporters, he has a hotline to the hopes and fears of the West's business leaders. "Because of our relationships we get visibility," he says. "Before we get orders we have a good idea of how clients will spend."

Optimistic blue-chip bosses will quiz him about expensive upgrades to their IT systems – nice-but-unessential items such as the experimental Infosys gizmo that tells a supermarket how long customers spend in front of individual shelves.

When things look bad, he gets asked how to cut costs by moving work to India, where wages are cheaper. Most of his recent calls, especially from the western banks that accounted for a third of Infosys's $3 billion in revenue last year, have been along this latter line. "Lots of budgets that are being finalised are flat; some of them are down … declines are in single digits," he says.

Many banks – especially those whose chief executives departed in the wake of the sub-prime debacle – are yet to make spending decisions. One of the few matters on which clients are sure is that Infosys should gear up to take on more cost-cutting outsourcing work.

"Clients are telling us 'we will require more offshore support, don't reduce your hiring'," Mr Gopalakrishnan says.

The Infosys top brass are ptting on a very brave face, but the US slowdown has come at a bad time. The Indian IT industry is already battling the effects of the rupee's sharp appreciation and wage inflation running at between 12 and 15 per cent. Moreover, the sector will soon face an estimated $1 billion-plus bill when a holiday on export taxes on software lapses, a move that will hike Infosys's effective tax rate to about 22 per cent from about 15 per cent.

Right now, Mr Gopalakrishnan admits, Infosys would like to be moving away from low-margin business process outsourcing (call centres and the like) towards high-end consulting work. However, "discretionary spending is rare," he says – another way of saying that clients are moving in exactly the opposite direction.

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