The Hindu Business Line : IT sector growth rate to slow down: Nilekani

Admitting that the country’s IT sector cannot be immune to the global crisis, Bangalore-headquartered Infosys Technologies Co-Chairman, Mr Nandan M. Nilekani, said on Sunday that the tech sector would see a slowdown in the growth rates witnessed in the last four-five years. The IT industry is, however, resilient enough to deal with challenges and will continue to grow and recruit, the Infosys honcho added.

Global challenges

“The Indian tech sector will also face the same set of global challenges, but the sector will continue to grow….It will not be the same growth rates seen in the last four-five years. But the sector will continue to create jobs,” Mr Nilekani said at the India Economic Summit organised by the CII here.

Mr Nilekani pointed out that Infosys had already revised its guidance for the current fiscal.

Last month, Infosys set a sombre mood for the Q2 earnings season when it lowered its dollar revenue guidance for FY09 by six percentage points. It now expects revenue to be between $4.72-4.81 billion.

“There is a global scenario which is unprecedented and it will have an impact on everyone. But the IT industry has demonstrated time and again that it is resilient enough to deal with these challenges. We had a similar situation earlier in 2001, but we were able to not only get out of that but to also take advantage of that. I am sure that companies are following the right strategies to wait for the situation to subside and then take advantage of the next cycle of growth,” he added, but declined to comment on specific numbers.

Nasscom had initially projected a 21-24 per cent growth for the current financial year, but the software association has now stated that the industry may see slower growth rates during the second half (against the year-ago period), in the wake of the global financial crisis. Nasscom will complete the ‘review process’ of the FY09 export growth targets, sometime next month.

Recruitments

Asked if the software industry would achieve the targets set for FY09, Mr Nilekani said, “For numbers you must talk to Nasscom, but all I can say is that there will be a slowdown, which is understandable given the crisis. But companies will continue to recruit…We are going to go ahead with the recruitments.”

After years of posting scorching growth rates, the frontline IT companies, last month, ended up projecting modest revenue growth for the third quarter ending December 31, 2008. It was ditto for the current fiscal, as delay in decision-making and ramp-ups, and pressure on discretionary spends hurt business sentiments.

Earlier today, while offering his perspective on India’s past, present and future from his forthcoming book ‘Imagining India: Ideas for the new century’, Mr Nilekani said that his book dealt with 18 ideas clubbed under four heads. “These include ideas that have arrived (attitude towards people, entrepreneurs, technology, globalisation and even English language); Ideas that are agreed upon but have not been implemented (primary education, infrastructure and urbanisation); Ideas of ideology that we argue about (higher education and labour reforms), and Ideas that we need to anticipate,” he pointed out. The book would be released in India on November 24.