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Mr T.V. Mohandas Pai

Our Bureau

Bangalore, Sept. 11 The sharp decline in oil prices and the easing inflationary pressures have raised hopes of the Indian IT industry to look for better prospects in the second-half of the current fiscal.

“The price of crude oil has come down and it would have a tremendous impact in creating new growth impulse,” said Mr T.V. Mohandas Pai, head of education and research and member of the board, Infosys Technologies Ltd.

Mr Pai was speaking at a press briefing to announce the renewal of Infosys’ group life insurance policy worth Rs 24,000 crore with the Life Insurance Corporation of India.

“The sub-prime crisis is wearing out. We have passed the turning point,” Mr Pai said referring to the changing market conditions in the US, the largest market for IT services spend. Indian IT vendors such as Infosys, Tata Consultancy Services and Wipro Technologies, are facing challenging times in the aftermath of credit crisis in the US, which forced customers to either reduce or hold back their budgets on deploying new technology applications.

“The worst is behind us and there would be some stability in the financial market. We will have to wait and see,” Mr Pai said. Declining to comment further, Mr Pai said for more clarity, one would have to wait for the quarterly results due next month.

An analyst with the Mumbai-based brokerage Motilal Oswal Securities Ltd said Mr Pai’s statement makes sense if the crude oil prices stay at this level for another year. “When oil prices went above $140 a barrel, companies were cautious because of cost escalation. It made business difficult and there was hardly any new spends. However, with oil prices coming down, companies would continue with their normal business expansion. This would benefit the IT companies as well,” the analyst said.

However, the analyst cautioned that there was an element of speculation in saying that the price of crude oil would stay at this level. “This is not a secular trend”.

The rise in the crude oil prices was more due to speculation rather than the demand-supply factor, and it is difficult to say now whether the prices would stay at the same level.

More Stories on : Software | Outlook | Economy | Infosys Technologies Ltd

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