Hyderabad: India’s software firms will continue to face an uncertain business environment over the next 18 months as new orders slow and customers cut spending due to the deepening recession in the US, according to the country’s main software industry lobby.
National Association of Software Services and Companies (Nasscom) said the industry would grow slower in the year to March than the 24% growth it registered in the six months to September, but did not provide a new estimate.
Mixed signals: Nasscom president Som Mittal sees growth slowing. Hemant Mishra/ Mint
India’s software and back-office services exports reached $40.4 billion (about Rs1.96 trillion) in the year to March. In July, Nasscom said the industry would grow by 21-24% this fiscal.
Since then, the US has witnessed a collapse of financial institutions such as Lehman Brothers Holdings Inc., and the world’s biggest economy has tipped into a recession. India’s own economy, which has grown at an average annual pace of 8.9% in the past four years, is also slowing under the impact of the global turmoil, hurting corporate profits and forcing companies to put investments on hold.
“We are getting mixed signals. There are some areas where growth is continuing because customers are under pressure,” said Som Mittal, president of Nasscom. “But very clearly decision-making is slowing at this point in time.”
In a 9 December report, technology researcher Forrester Research Inc., projected IT-outsourcing growth to remain moderate till 2010, even as the recession in the US is to continue till the middle of 2009.
The moderate growth would be due to smaller outsourcing deals and the 9-15-month time lag for taking decision to outsource to actual transition, it said.
On 14 December, India’s largest IT service provider by revenue, Tata Consultancy Services Ltd (TCS), said any growth projections for the Indian IT industry this fiscal could at best be a guess due to the unpredictable business scenario. “I think it is impossible to predict what is really happening, because we are living in times where everything is unpredictable,” said S. Ramadorai, chief executive of TCS.
Earlier, Infosys Technologies Ltd, India’s second largest software exporter, said the IT industry would grow by 15% this fiscal.
“There would be some resetting of expectations,” said Mittal of Nasscom. Nasscom will come out with revised projections for the industry in January, once it gets clarity on the technology budgets of clients in the US and Europe, he said.
Traditionally, global firms finalize their IT budgets in December for the following year, but the current uncertainty has made many of them defer the process.