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Indian IT sector not impacted by Russia-Ukraine war; in wait-and-watch mode

Analysts say no direct presence in Ukraine; per 60% of the sector's business comes from US, another big chunk from UK, Germany and France

IT employees
For the $227 billion IT services industry almost 60 per cent of the business comes from the US, and the next big chunk comes from Europe.
BS Reporter Mumbai
3 min read Last Updated : Feb 28 2022 | 7:01 PM IST
The Indian IT services sector, which has more than 30-40 per cent of its revenue coming from Europe, does not see the Russia-Ukraine crisis impacting operations in Europe. Analysts and companies told Business Standard that since there is no direct presence in Ukraine the crisis has not impacted them.

C P Gurnani, CEO and MD Tech Mahindra said that anything that destabilises is a concern and that though there is no threat to business they are being cautious on data security needs of the clients and on continuity.

“Anything that destabilises, is always a concern. First, a lot of our clients have development centres in Ukraine. When you are a global delivery center you need to be cognizant of the fact that disruption is a threat and an opportunity. Second we believe cyber security has to become bigger priority for all the corporates because we do not know where the war will be fought, and the third reality is that there is a fallout of every war and we do not know how long it will last, and the impact it will have especially with global supply chains getting impacted,” said Gurnani.

Tata Consultancy Services (TCS), the second largest player in the global IT services in a statement said: “In response to the unfortunate events unfolding in Ukraine, TCS wishes to inform that we do not have employees or offices in the region. We are monitoring the current situation with great concern. We do understand that some of our associates have family and friends in Ukraine and we are extending all support to them during this crisis.”

Analysts tracking the sector also state that the Russia-Ukraine crisis so far does not look like a threat. A Kotak Institutional Equities Research report said: “Companies expressed confidence that a high inflationary environment in developed countries and Russia-Ukraine conflict will not be detrimental to IT spending. Change in business spends which usually come under pressure during times of macro uncertainty will continue to be strong since they are no longer optional and have become a necessity to compete in the market. Tech spending has become more resilient and existential.”

For the $227 billion IT services industry almost 60 per cent of the business comes from the US, and the next big chunk comes from Europe. Though within Europe, the UK, Germany and France make up a chunk of market share. Most of the smaller European countries have been a source of talent and many have created near-shore centres in countries like Poland and Belarus.

“The concern and hope is that this should not escalate to other regions otherwise it will not be good for the economy in general as well as for the Indian IT players as many have substantial presence in countries like Poland,” said an analyst on condition of anonymity.

Topics :Indian IT SectorIT servicesEurope