The past weekend was particularly tragic: The serial bomb blasts in New Delhi and the news about Lehman Brothers and Merrill Lynch.

One is case of explosions and the other of implosions. Both events have important implications for the outsourcing industry.

India is getting increasingly prone to terrorist attacks. Outsourcing centers like Bangalore, Hyderabad and the National Capital Region ( comprising New Delhi, Gurgaon, Noida) and others are prime targets and there is evidence that the threats are not empty. The specter of more terror attacks would rob these cities of their status as destinations of outsourcing excellence. Clients need to factor in the inherent risks in outsourcing to these cities. Incidentally, our October issue spells out the Top 50 Emerging Cities for Outsourcing. And there are indeed many cities that are safer than Bangalore or Gurgaon.

The leading global services vendors have a large exposure to the financial services segment, especially banking and insurance. Till the time the sector showed a weak performance, one could take comfort in the fact that both strategically important technology projects and back-office related tasks would continue. It meant that these vendors could have hoped for a continuation of existing engagements, if not new. But how do they handle the prospect of companies vanishing from the firmament? Insurance seemed immune to the current crisis, but with AIG desperate for a bailout – what tales have the other insurance majors closeted?

Decidedly, the impact of both these events are not merely short term or situational. There are important implications for the long haul.