Allaying fears of a slowdown in the US affecting Indian IT companies in the long run, analysts have predicted a robust outlook for top rung companies in the coming quarters. Given that global biggies such as Accenture, SAP and Oracle gave strong indications for the rest of the year, slowdown theories in tech spending are being considered premature.
According to brokerage firm Edelweiss Securities, US slowdown would affect Indian IT companies, at least initially, till companies reconfigure the composition of their IT spend in favour of offshore. Leading global technology firms, which drive a significant portion of Indian IT?s growth, have sounded out confidence in the current environment, it said.
Infosys growth momentum slowed down for five quarters in succession when slowdown affected Indian IT companies in FY02. It registered five-quarter revenue growth of about 5%, before picking up again in the first quarter of fiscal year 2003.
But analysts say the period of slowdown in the current scenario should be considerably shorter as Indian IT vendors are now more diversified geographically.
?The slowdown during 2001-02 was technology-induced. Billing rate increases of over 15% a year had risen to unsustainable levels. But now pricing for vendors is improving,” Edelweiss said.
Analysts believe effects of a slowdown should be contained within two to three quarters before revenue growth in dollar terms goes up again for leading Indian IT companies like Infosys, TCS, Wipro, HCL Technologies and Satyam. Research firms Gartner and Forrester have also reaffirmed that IT spending is looking up in the second half of 2007.
In the July-September quarter, country’s largest software exporter TCS reported a net profit growth of 22.8% at Rs 1,252 crore over the corresponding period in the previous fiscal. Infosys net profit grew 18.4% at Rs 1,100 crore on a year-on-year basis. Wipro, Satyam and HCL Technologies recorded a year-on-year net profit growth of 17.7%, 27.9% and 23.2%, respectively.