IT shrugs off recession fears
It is now clear that the IT and BPO sector will be hit by the US recession only in the future, report Venkatesh Ganesh & N Madhavan.business Updated: Feb 11, 2008 23:05 IST
Recession? What recession? While clouds of uncertainty seem to loom large on the country’s information technology and business process outsourcing (BPO) industries, the verdict came clear on Monday that troubles arising from a strong rupee, higher salaries or US recession would be more in the future than in the past.
Two days ahead of its annual summit, the National Association of Software and Service Companies (Nasscom) reported that the industry was expected to close the 2007/08 fiscal year with an export growth of 30 per cent, in line with the boom figures of the past few years.
The industry’s strategy review estimates that exports would total $40.8 billion in the current year, while domestic sales would show a surprisingly robust growth end the year at $11.2 billion, an increase of 37 per cent.
The industry now employs more than 20 lakh people. “Positive market indicators and a strong track record strongly support the optimism of the industry in achieving its aspired target of US$ 60 billion in software and services exports and US $ 73-75 billion in overall software and services revenues, by FY2010,” Nasscom said in a statement.
However, Nasscom president Som Mittal, eyeing a possible US recession, said there were global macro-economic challenges ahead. “Talent, manpower and infrastructure issues will need to be addressed and resolved, collectively. The industry has shown resilience and has taken several steps to mitigate the impact,” Mittal said.
Industry leader Tata Consultancy Services this month said 500 employees had been weeded out in performance-based exits. Industry insiders say this could be a signal for others. TCS, Wipro and Infosys are expected to increase wages by 7 to 8 per cent in the new fiscal year, as against 15 per cent or so a year earlier.
Including hardware, India’s IT industry is estimated to be worth $64 billion, up 37.5 per cent from the previous year. Nasscom estimates that IT and allied services account for 5.5 per cent of India’s gross domestic product, up from 1.2 per cent a decade ago. “As we move towards 2010, trends indicate that the industry is firmly poised for broad-based growth across industries and service lines,” said Lakshmi Narayanan, Nasscom’s chairman and vice-chairman of Cognizant Technology solutions.