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A representational image. Photo: Mint
A representational image. Photo: Mint

IT firms with China operations report 80% attendance: Nasscom

  • The lockdown in China which began late January and lasted till last week saw the technology industry taking a hit with the Asian country being a hub for telecom and well as electronics manufacturing

MUMBAI: Even as India extended its lockdown, companies with a presence in China are back in business with easing of restrictions. Nasscom has said member companies across the sector are operating with almost 80% attendance.

The lockdown in China which began late January and lasted till last week saw the technology industry taking a hit with the Asian country being a hub for telecom and well as electronics manufacturing. Even Indian businesses with presence in China now see green shoots as operations return to normalcy.

“As per the information available to us from our member companies, most of the China services sector is now back in office with 80% attendance. Albeit with physical distancing norm and with automatic temperature checks at entry to offices, frequent use of sanitizers, staggered breaks for lunch, only pantries that are licensed can offer food, no makeshift pantries allowed, etc," said Gagan Sabharwal, senior director, Global Trade Development, Nasscom.

He said there are companies who still prefer to carry out tasks that can be handled from home and this general trend will continue for some time.

Data networks integrator Sterlite Technologies Limited (STL) said, while its China unit is operational and is providing fibre for global demands, the current India demand is still being managed from the inventory in India under the essential services delivery. “(STL’s) China unit is operational and providing fibre for global demands as well as China demand - the unit is gradually coming back to pre-covid level utilisations and has orders for deliveries," said Anand Agarwal, Group CEO, STL.

Analysts are of the opinion that revenues of IT firms could be impacted in the first six months on FY21 because of covid-19. Following the early lockdown in China, global IT companies like Accenture had already revised their guidance for the year factoring in the pandemic. India’s second largest IT company Infosys, which has a large presence in China has indicated that an impact of $8-10 million (0.3 per cent of quarterly growth) due to lost billings in China, though presence in Italy is small in the upcoming Q4 results.

Many others have been reassessing their guidance for the upcoming quarters following the extended lockdown in China and now India. Apart from constraints on physical movement, the lockdown also resulted in lower utilisation of workforce across critical and high security applications. The fact that business is returning to normalcy in the region, albeit cautiously, is a positive for the sector.

Information technology services major Tech Mahindra is present in China for over 15 years and involved in over 2,000 projects. It had suspended operations in Wuhan due to the lockdown but was functioning in other regions of China.

“The centres in Shanghai and Beijing were operational. We are constantly monitoring the situation and are working in accordance with the government's orders and guidelines," said C.P Gurnani, MD & CEO, Tech Mahindra, prior to the lifting of the lockdown in Wuhan.

While Infosys and HCL Technologies have guided for a double-digit growth in revenues in FY20, market leader Tata Consultancy Services is expected to post high single digit revenue growth. Wipro is also expected to improve its performance in the fourth quarter results to be announced on 15 April.


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