Indian IT majors have probably done the right thing. They have put on a brave front and have categorically said that they are well prepared to take on any eventualities arising out of the economic slowdown. The firms were unanimous in their choice of words and said they had learned their lessons from the recessionary years, and hence were better equipped this time around.
Infosys and Wipro expressed some concerns over the US economic stability and the ongoing debt crisis in Europe, but felt that the export-heavy Indian software sector will be able to deal with the situation appropriately this time based on the earlier experience of 2008. Industry leaders have even said that structural weaknesses in the economy will provide more opportunities for IT firms. They are seeing opportunity this time. Fear seems to be in the background, at least for now. The time is not ripe yet for the alarm bells.
Globally, for the $60 billion Indian IT industry US is the largest market contributing nearly 60% of its revenues, followed by Europe, which contributes 30% of the total IT revenues. During the recently concluded first quarter results, executives from top-tier IT companies signaled the beginning of yet another difficult period for the industry. Technology budgets, drawn up by customers in January this year, have not been revised but the sales cycle in certain sectors are getting longer. During the June quarter, except for TCS, which was the least apprehensive about the macro economic environment of the top three players, reported volume growth far ahead of its nearest rivals. Infosys? net profit fell 5.3% sequentially during the first quarter, while Wipro had posted a marginal increment of 1.2% in net profit in Q1.
These are obviously tough times, but now is the time for the tough to get going.
Apple?s trillion dollar dreams
On August 9, Apple briefly became the most valuable company in the US going past Exxon Mobil. Apple?s market capitalisation was $341.5 billion in mid-day trading on August 9, and Exxon Mobil had a value of $341.4 billion It is now trading nearly 11 times the estimated earnings for the fiscal year ending September. The Steve Jobs-led firm is now sitting on $76 billion of cash; something that most companies cannot even dream of in these times. In the last quarter, Apple?s firm?s sales grew 82% and earnings jumped 125% from the year-ago period. Awesome. A trillion dollar company in waiting?
In search of some truth
Mahindra Satyam has begun a countrywide crackdown against employees who have joined the organisation using fake certificates and fraudulent means after it found some people had circumvented the company?s background verification process. By September the background verification of around 21,000 employees currently working in India would be completed. Those who have got in through fraudulent means may be imposed with a cheating case. Fraud incidents have so far been reported at the company?s Hyderabad, Chennai and Bangalore offices. This could be a real challenge, though the company has reported a 2-fold jump in net profit in Q1. For Satyam the search for truth continues.