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H2 growth may be slower, says Nasscom

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Mr Som Mittal
Mr Som Mittal

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New Delhi/Hyderabad, Nov. 7 Software association Nasscom on Friday said that after about 24 per cent revenue growth clocked in the first half of the current financial year, the Indian IT industry may see a slower growth rates in the second half, due to the global financial crisis.

“We had a very good growth in the first half…the growth rate had been in excess of 24 per cent for the top 10 companies. But the growth rate in the second half of FY09 is likely to be lower compared to the year-ago period. Given the slew of mergers and consolidation overseas, people are reviewing IT budgets,” the Nasscom President, Mr Som Mittal, said.

He, however, pointed out that the weighted average for growth for the full year and the actual impact of the slowdown would be known once Nasscom completes the ‘review process’ of the export growth forecast for FY09, sometime in December.

Mr Mittal, had said in Hyderabad on Thursday that the association had not yet lowered industry targets, and that estimates were needed to be made based on the impact of slowdown on specific segments, companies and clients.

He had also emphasised that the association looked at long-term growth trajectory and it would not focus on the growth rates on a quarterly basis.

Nasscom has estimated that India’s software and services revenue would grow between 21 and 24 per cent during 2008-09 to touch $62-64 billion. Within the FY09 revenue targets, exports were forecast to account for $50 billion, with the domestic business raking in another $13 billion.

However, the top two markets for Indian industry — the US, which contributes to more than half their revenue, and Europe — have been hit by the economic crisis. Compounding the issue is Indian IT industry’s exposure to banking and financial services space (40 per cent of industry exports).

Recently, while Tata Consultancy Services reported a flat growth in Q2 net profit, soap-to-software conglomerate Wipro projected muted outlook for its IT business for the December quarter, reflecting the bleak global economic condition.

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(This article was published in the Business Line print edition dated November 8, 2008)
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