Automation of services and pressure to reach margins has led to a trend of less hiring in the IT sector, according to the National Association of Software and Services Companies (NASSCOM). The hirings in the past 2 years have been dreasing with the figures reaching just two lakh additions last year, while NASSCOM predicted that this year too the fall will continue.
Automation of services and pressure to reach margins has led to a trend of less hiring in the IT sector, according to The National Association of Software and Services Companies (NASSCOM). The hirings in the past 2 years have been dreasing with the figures reaching just two lakh additions last year, while NASSCOM predicted that this year too the fall will continue. New hiring numbers are static or declining, and the pace is decreasing even further, said President R Chandrashekhar. The association predicted that the growth in the IT industry has been uniform across the many sectors, even as Wipro and Infosys have put in dismal numbers for their respective first quarters. Infosys, generally doesn’t put in quarterly figures, had made cuts in its annual earnings forecast from 11.8% – 13.8% to 10% – 11.5%. Wipro too said that the IT sales growth will be less than 1 percent. But NASSCOM believes that its prediction of 10-12 % will stand and there will be no cuts, because only big companies like these cannot determine the future foe the whole IT industry. Meanwhile TCS India’s biggest IT services provider put in growth numbers for net profit at 9.9 %. In short, for the next two years, we are still quite optimistic. Our fundamentals are stronger than others (countries). Inspite of the current global economic situation, there is a fairly strong demand for IT.
Here are a few predictions that NASSCOM has made for the Indian IT industry:
1. “Automation has led to less hiring in the IT industry”
According to NASSCOM, since the last few years, IT industry has been putting a lot of emphasis on automation that has led to a loss in the number of hires. Priority on automation has made the productivity increase but it has also led to the decrease in the number of people. In our country economic levels are different, hence automation has a different impact than it does in other developed countries. Also Chandrashekhar said that off-shored jobs are still coming to India, which impacts the general hiring.
2. “No need of change in annual forecast even after muted 1st quarter numbers”
IT companies like Wipro and Infosys have dismal first quarter numbers, but NASSCOM sees no reaason to cut IT industry’s annual growth forecast that is 10% to 12%. According to them the growth in companies have been uniformly distributed in all verticals and there has been no change in the demand for IT services. While Wipro in its forecast for second quarter said that there would be a growth of leass than 1% in IT services sales. Although big comanies like these constitute just a part of the big IT industry which includes, other large and small companies and startups.
3. “IT industry can can afford to wait and watch for Donald Trump till elections; no need to panic”
IT industry might get affected if Donald Trump is elected president. His stance on immigration policies might change the outsourcing rules which can have an impact on India, but NASSCOM president assured that it is not a panic situation as Indian IT industry is of value to the US and as it helps create a lot of jobs, hance the industry can afford to wait till policy changes are made.
4. “Brexit might have long term effects in India”
According to NASSCOM the effects of Britain exiting the EU can be seen only after the Q2 and Q3 reports of the IT companies. UK will not implement the Article 50 which is a formal mechanism to leave the Europen Union, till late this year. After that it will take some time to actually shift. NASSCOM said that the short term reactions are negative from what has been seen and if the UK currency depreciates in the time to come, the contracts need to be negotiated again, else it might incur losses or the gains might get very low. Apart from that Britain leaving the EU will open up more opportunities for Indian IT industry.
(with PTI inputs)