The Hindu Business Line : ‘Outlook uncertain for next 4-6 quarters’

Bangalore Dec.16 The National Association of Software and Services Companies (Nasscom) expects business uncertainty for the Indian outsourcers to continue for the next four to six quarters as the global economic turmoil impacts technology spending in key markets such as the US and Europe.

“There will be some resetting of expectations. I see more clarity coming from the first quarter of next fiscal,” said Mr Som Mittal, President, Nasscom, on Tuesday.

To lower growth forecast

Speaking to reporters on the sidelines of TiE Entrepreneurial Summit, Mr Mittal said decision making by clients has slowed down considerably and that member companies don’t have a great idea of their recovery plans. Nasscom would lower growth forecast for the software sector later this month, he said.

Nasscom current forecast indicates a 21-24 per cent growth for the country’s software exports that was revised lower in July from earlier estimates of 25-29 per cent.

“Second half should be slower, that’s very clear. First half has been reasonably good. We have had 24 per cent growth in revenues in the first six months,” Mr Mittal said.

Early this month, the second largest exporter Infosys Technologies said it expected the sector’s growth to slump by nearly half to 15 per cent following a slump in demand in the US, the largest IT services market, and Europe. Indian exporters earn over half of their revenues from US and about a third from Europe.

Impact on hiring plans

Further, Mr Mittal said the slump in demand would impact hiring plans of the Indian IT firms, which will be significantly lower in the next fiscal. “Attrition levels are low, lateral hiring is low. Companies are looking at productivity increases,” he said, adding “wages will see moderation further.”