Nasscom may set sights lower for 2017 fiscal year

Venkatesh Ganesh Bengaluru | Updated on January 16, 2018 Published on October 26, 2016


R Chandrasekhar, President of Nasscom

IT industry body Nasscom will look at reducing the guidance for the IT sector for the fiscal year 2017.

For the current fiscal, Nasscom expects the $143-billion IT sector to grow at 10-12 per cent.

“Looking at the macroeconomic factors and the companies’ readiness in dealing with this situation, growth could be in single digit,” said an analyst, who did not wish to be named.

Decision soon

Talking on the sidelines of Nasscom Product Council, the IT body’s President, R Chandrasekhar, said the Association will take a decision in the next couple of weeks.

“We are waiting for some more companies to announce their quarterly results,” he said. Cognizant and Tech Mahindra are yet to report their second quarter numbers.

Acording to industry watches, the tepid results posted so far by TCS, Infosys and Wipro (in a seasonally strong growth quarter) do not inspire much confidence in the sector in the near term.

Majors disappoint

Infosys has cut its revenue guidance twice in both the quarters of this fiscal and its revised guidance estimates point to a 8-9 per cent growth (in constant currency) terms down from 10.5-12.0 per cent earlier.

While TCS does not give annual guidance, back-of-the-envelope calculations suggest an 8 per cent growth, its lowest in the last three years.

Tech shifts

“First, technological shifts are happening at a rapid pace and the industry is coming to terms with it, which will cause some pain in the near term,” Chandrasekhar told BusinessLine. However, he added that the demand outlook for the sector is good, which can be seen from the fact that Gartner, in ia recent report, said investments in technology will go up 3 per cent.

Companies are also grappling with global macroeconomic factors such as Brexit, and volatile oil prices, which have made many companies in Europe and the US hit the pause button on spending.

But there are some positives on the horizon. According to CP Gurnani, Chairman, Nasscom, investments will happen in areas such as digital and automation. “Whether companies like it or not, their end consumers like the Millennials will demand such technological changes,” he said.

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Published on October 26, 2016
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