India Software Industry Faces Slowdown
The pace of export revenue growth of Indian software companies will likely moderate next fiscal year amid continued global economic uncertainty, the main industry body said, echoing views of the country's top outsourcers.
By R. Jai Krishna
NEW DELHI – The pace of export revenue growth of Indian software companies will likely moderate next fiscal year amid continued global economic uncertainty, the main industry body said Wednesday, echoing views of the country's top outsourcers.
Exports from the sector may grow 11%-14% in the year that starts on April 1 to $76 billion-$78 billion, compared with an estimated $68.7 billion this fiscal year, an increase of about 16%, said the National
Association of Software and Services Companies, or Nasscom.
Indian software exporters earn nearly 90% of their revenue from Europe and the U.S., which are faced with major economic challenges. The sector was hit hard through 2011 as clients delayed decisions because of economic problems, political turmoil and natural disasters.
India's top software firms -- Tata Consultancy Services Ltd., Infosys Ltd. and Wipro Ltd. -- have over the past month or so warned of delays in spending by clients and gave cautious outlooks.
Research firm Gartner recently cut its estimate of global spending on information technology to $3.8 trillion in 2012, up 3.7% from 2011. Its previous forecast was for a 4.6% rise. It cited "faltering global economic growth, the euro-zone crisis" among the reasons for reducing its outlook.
"The demand environment is still uncertain," Nasscom President Som Mittal told reporters.
Nasscom Chairman Rajendra Pawar said that almost all economic indicators "went down south" this fiscal year. "We find much lower clarity in the year than we had in a long time."
The body said it will review its export forecasts in October.
With its large English-speaking and relatively cheap workforce, India remains a preferred outsourcing destination for companies in developed markets. India's share in global outsourcing was 58% in 2011, up from 55% in 2010, Nasscom said.
But rising wages and other costs have been threatening the country's predominant position in the outsourcing market. Factors such as currency volatility will remain in focus after a sharp fall in the rupee against the U.S. dollar helped local software exporters in the October-December period, say analysts.
Source : mobile.wsj.com
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India software industry slowdown
Wednesday, February 8, 2012
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