IT industry body National Association of Software and Services Companies (Nasscom) on Thursday lowered its guidance for the sector in the current fiscal to 7-8% against 8.6% revenue growth the industry posted in FY17. The guidance in FY17 was in the range of 8-10% after Nasscom had lowered it from the initial 10-12%. Citing political and macroeconomic factors, Nasscom had for the first time in 25 years deferred its annual revenue guidance in February this year. The latest update reflects the growth pangs of large Indian IT companies such as Tata Consultancy Services, Infosys and Wipro, all of which had recorded a single-digit rise in revenues for FY17. In fact Infosys, once considered the sector’s bellwether, has provided a revenue growth guidance of just 6.5-8.5% for FY18.
The Indian IT industry had reached a size of $154 billion in FY17 which includes exports, domestic and hardware. Export revenue, which forms the major component of the overall revenues touched $116 billion in FY17 and is expected to reach $124-125 billion at the end of the current fiscal. According to Nasscom, export growth has started to pick up slowly with improvements in financial services and the high potential in digital businesses. It expects a revival in spending from the financial services industry and increased automation-based projects driving deals in future.
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Nasscom president R Chandrashekhar said, “There is a need to focus on re-skilling about 2 million workforce in the next four to five years. Considering the evolution that the industry is undergoing due to the adoption of new technologies, it is imperative that we as an industry drive the skilling and re-skilling of new and existing talent, so as to ensure the requirement that will be created in the form of new job roles.”
Given the industry’s single-digit growth rate, there were reports that companies such as Infosys, Wipro and Tech Mahindra were taking steps to lay off their employees. However, Nasscom categorically denied any such move and stated that industry would hire around 1.3-1.5 lakh people during this fiscal. The industry had a total employment base of 3.8 million at the end of FY17.
Nasscom expects digital to be one of key growth driver for the industry and also the adoption of new technologies such as SaaS applications, cloud platforms, business intelligence, cognitive and embedded analytics as enterprise customers scale digital projects.
“The IT-BPM industry in India continues to demonstrate a sustained growth index. The industry has continuously reinvented itself and its performance in FY 2017 showcases how the industry has focused on building its digital solution offerings through a combination of business model changes and investment in products and platforms,” said Nasscom chairman Raman Roy. The domestic IT market is projected to grow by 10-11% during the fiscal given the various technology enabling policies of the government. Nasscom highlighted the vision of the $1 trillion digital economy in India by 2022 and the need for enabling policies and key projects to fast-track this over the next five years.
Further, outreach to newer markets too will be a top priority for Nasscom with a focus on showcasing digital solutions in geographies like Japan, Germany, China, West Asia and Africa. “We are looking beyond the US market which contributes to more than 60% of the exports. While it may not change overnight, but we hope to reach out to newer markets and reduce the dependency on the US market,”’ Chandrashekhar said.