IT outsourcing spend is starting to come back, according to Kris Gopalakrishnan, Co-Founder and Executive Co-Chairman of Infosys.
Speaking on the sidelines of a CII event, Gopalakrishnan told reporters that discretionary spending, which forms the bulk of outsourcing business for Indian IT companies, is making a comeback in the US. Currently, North America accounts for more than 70 per cent of revenues in the $100-billion Indian IT sector.
According to Nasscom estimates, the Indian IT sector will grow at 11-14 per cent, which is less than the 16.7 per cent it clocked in FY12.
“While clients are slow in decision-making, areas in outsourcing such as cloud computing are growing around 20 per cent for companies like Infosys,” said Gopalakrishnan.
Banking and financial services segment, which contributes to more than 60 per cent of the IT outsourcing spends, is under lawmakers’ lens as scandals such as Libor have affected the companies’ decisions on outsourcing.
Infosys had lowered its guidance for FY13 to 5 per cent as clients backed out of projects. Similarly, Cognizant cut its calendar year 2012 guidance to 20 per cent from 23 per cent citing slower-than-anticipated pick-up in demand in the banking and healthcare verticals.
While TCS does not give guidance, it maintained a cautious stance saying that IT spending by large banks in the US still remains hazy. Wipro did not give a full-year guidance but sees flat growth. HCL Technologies has also said it may not see such good times going ahead.
Europe, which is going through an economic crisis, will continue to see investments from Infosys, said Gopalakrishnan.