1. With TCS, Infosys and Wipro performances not up to par, Nasscom cuts IT industry growth rate to 8-10%

With TCS, Infosys and Wipro performances not up to par, Nasscom cuts IT industry growth rate to 8-10%

Lowered projection was on expected lines as the performance of TCS, Infosys & Wipro was below expectations

By: | Bengaluru | Published: November 17, 2016 6:26 AM

Nasscom, India’s IT industry body, has revised its annual revenue growth guidance for the sector to 8-10% as against the earlier guidance of 10-12% given the global politico-economic headwinds. The lowered projection was on the expected lines as the performance of the big three of Indian IT – TCS, Infosys, Wipro – for the first half of the current fiscal was below expectations.

Nasscom President R Chandrashekhar said, “The industry is going through a transient phase with various domestic and global factors impacting its performance. While the effect of various short-term factors may show for a couple more quarters, the worst is behind us. Global projected growth for the industry is high and our share remains strong.”
The first major headwind faced by the Indian IT industry was the impact of Brexit, which is now slowly unravelling with delays or closure of projects as witnessed with Royal Bank of Scotland cancelling its contract with Infosys. The uncertainty over the policies of the US President elect – Donald Trump has increased the pessimism.

Added to this, there has also been shift in the demand for IT services which has now moved to the digital domain. This has resulted in a twin blow for the sector with pricing pressure on the industry’s traditional bread-and-butter business while the digital segment is not bringing in the volumes. At the end of second quarter of this fiscal, TCS recorded a flat growth while Infosys reduced its annual guidance to single digits while Wipro did not remain optimistic for the third quarter. The Indian IT industry currently employs around 3.7 million and the current slowdown in the sector has impacted the annual salary increases which has now dropped to single digits.

Despite these headwinds, Nasscom reiterated that the long term opportunity and potential for the industry remains unchanged with a vision to achieve $350 billion revenues by 2025.

The industry trade body said that global software and IT services globally is set to grow at a healthy pace of 7.2% and 4.4% respectively in 2017. “To stay globally competitive, the need of the hour is for Indian firms to invest in the future and enhance their digital capabilities. This entails a mix of re-skilling, domain and platform capabilities coupled with acquisition led competencies,” it said.

India currently is the biggest global inhouse centre (GIC) locations globally, with over 1000 centers focused on technology, services, R&D and innovation. The country is also the third largest start-up ecosystem in the world with over 4750 firms, witnessing a growth of 10-12% annually.

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