In a first, Nasscom defers annual IT sector growth forecast
Mumbai: In what seems to be a fallout of the uncertainties in the US, India’s information technology industry’s biggest market, software lobby group Nasscom on Wednesday deferred the release of its annual revenue forecast for the next financial year by a quarter.
Apart from US President Donald Trump’s hard-line stance on immigration and H-1B visas, which may directly hurt Indian software companies, other uncertainties confronting the sector are adverse currency movements, structural shifts in demand and a possible repeal of Obamacare, another name for the Affordable Care Act.
Nasscom president R. Chandrashekhar said the association will release its forecast for the Indian IT and business process management (BPM) sector, which is expected to generate $155.5 billion in annual sales in the year ending 31 March, only in the next quarter, most likely in May, after “deeper interactions” with customers and other stakeholders.
This is an unprecedented move and is a reflection of the current and persistent headwinds the sector has been facing.
Chandrashekhar also said the sector may grow at the lower end of its revised target in fiscal 2017, though he did not disclose the revised number. In its mid-term review in November, Nasscom cut its annual revenue growth forecast for this fiscal to 8-10% from the earlier 10-12%. Speaking to reporters ahead of the inauguration of the annual Nasscom India Leadership Forum, he conceded there were challenges in terms of factors such as a change in policies in the industry’s largest market, the US, under a protectionist regime. In a report released on the occasion, Nasscom said “market evolution and the service provider responses are likely to lead the way for a new face of the IT-BPM industry”. He, however, said there were positives such as faster growth in global IT spending to 5% in 2017-18 from 2.6% this fiscal year, citing analyst estimates.
Nasscom chairman C.P. Gurnani, who also heads Tech Mahindra Ltd, said the sector is still a “growth industry” and has a “good future” with areas like BPM, platforms and digital still showing growth.
Gurnani said the number of direct employees has grown 5% to 3.8 million this fiscal year, slower than the 8.6% revenue growth.
Due to the digital disruption taking place in the technology sector, a massive re-skilling exercise will have to be undertaken and up to 1.5 million employees will have to be re-skilled over the next 2-3 years, said Nasscom. Gurnani said that digital revenue now constitutes 14% of the total revenue stream.