IT sector growth could go below 20% as meltdown continues

Updated: Jan 19 2009, 05:30am hrs
In the context of the Satyam fraud rattling the Indian software industry, FEs Rupsa Ray talked to Ganesh Natarajanchairman, Nasscom and global CEO, Zensar Technologies, to get the IT apex bodys views on the recent events.

The Satyam incident has shaken the whole corporate world. What next Will Satyam customers move away

Satyam has got a very capable board now. However, at the moment, Satyam needs liquidity of at least Rs 500-Rs 1000 crore. If it manages that, then theyll be able to get a breathing time of 90-120 days. But at the moment, they need the cash as they have a lot to do, starting with paying the salaries of the employees.

Customers will obviously look for an alternative, but what is important is the continuity of business and hence Nasscoms advisory to the customers is not to take decisions in a haste. We do not want customers to suffer. Our lookout as an industry body is to ensure that business continues. But some clients will obviously move away.

What about Satyam employees

Satyam will continue. There could be a possibility of asset sale. A full merger is unlikely to happen right now. So again, Nasscoms advise is not to poach employees from Satyam. However, if any Satyam employee is capable and wants to move away, he or she will definitely get a job somewhere.

The problem will arise if a large chunk wants to shift taking the current job situation into consideration.

Do you think there will be more lay-offs

The current job situation is definitely tough. In the coming months also, its unlikely to change. We wont see companies going on a hiring spree. Some amount of hiring will go on, but obviously, the pace wont be the same as before.

What about the World BankWipro incident

It is an isolated incident. It wont put a serious dent on India Inc. The timing was totally wrong and hence it created such a ripple of worries.

Nasscom has already predicted that the growth of IT sector will be around 21%, as the slowdown continues what do you have to say about growth of the sector

As the slowdown continues, its quite likely that growth in the IT sector will slow down even more. The growth rate could go below 20% in FY 2010. However, exactly by what rate it will be growing is difficult to state right now. By February, it will be clearer.

However, it is also a fact that though there are negativities around offshoring, India is still seen as the most favourable destination by foreign clients. India s closest alternative is The Philippines, but India is way ahead of that country in all aspects, including size and quality of work.

The results are coming out one by one. Are they as per expectations

Taking the current situation into consideration, companies are doing quite okay. Its quite obvious that the results will show a decline. This decline is mainly because of huge forex swings.

PE investments have gone down as compared to last year. Will it go down further

A number of PE and venture capital firms have not invested or invested a very little and evaluated the market situation in the whole of 2008. People will sit on cash now. 2009 also could be the same. However, it also depends on the companys risk outlook. We saw Intel investing in India during this market situation. But PE, VC investments will definitely be slow.

Will STPI be extended after 2009-10 What is Nasscom doing about it

We have it till March 2010. However, we will keep pushing government to extend it.