When India?s bellwether Infosys Technologies reads out its quarterly numbers on January 11, the focus would not be on the October-December data but visibility ahead.

Although Indian IT services firms have consistently remained bullish on business prospects, there may be a possible disconnect between management forecasts and ground reality.

The reason is, with large global banks and financial institutions seeing pressures building up after the sub-prime meltdown in the US, most of the chief information officers are indicating ?a flat-to-slightly-down budgets for 2008, with cuts in discretionary spending projects in the first half of 2008 (calendar year).? The financial sector is the largest contributor of revenue for most big Indian IT companies.

In a recent report, global investment bank JP Morgan said the current US slowdown in the financial sector would impact Indian IT negatively in the short-term. ?While we do not expect any major hiccups in the December quarter, we believe that the Indian IT companies would begin to see pressures from financial customers in the first quarter of calendar year 2008. This should reflect in muted guidance for the March quarter,? it said.

The report said, the case was similar during the 2001-03 period when managements remained bullish all through 2000 and companies began to see negative impact on their businesses only in 2001. The disconnect, according to JP Morgan, is primarily because of limited visibility on discretionary project-based spending.

?While Indian IT companies do not provide break-ups, we believe that 35-45% of business comes from discretionary project-based work and has low visibility. So, short-term changes in discretionary budgets can affect growth rates easily by 10-20%,? the report said.

The report also pointed out that Indian IT companies usually had limited visibility beyond three months. But, with the fast-changing economic environment, plans for IT spending were also changing dynamically. ?Some CIOs have even indicated that they look at budgets on a month-to-month basis depending on the business or economic outlook. As such, there is continued reallocation on project-based spending or discretionary projects,? it said.

However, the report said what might be driving the positive commentary was that the Indian IT companies were seeing good demand from non-financial customers