Typically, US clients freeze their technology budgets by December and begin their technology spends, which includes outsourcing after they return from holidays in January. In the last two years, Rao says though clients have annual plans, they tend to relook at them every quarter and decide on how the funds could be deployed.
" ...obviously there will be some uncertainty in the mind of clients in terms of any kind of legislation which may make it a little bit more challenging for them to avail services of companies like ourselves. So that may probably play out for a period of time till they get much more clarity in terms of directionally what is the focus for Mr. Trump in the coming year and so on," Rao told a conference of CLSA last week.
Infosys and its Indian rivals such as TCS, Wipro and Cognizant are witnessing clients globally shifting their dollar spend to projects in areas such as digital or automation, from traditional IT services such as application development and maintenance.
The revenue from new areas is not offsetting the fall in income from traditional services - that contributes four dollars out of five dollars Indian IT industry earns.
"In a rebid situation particularly, be it infrastructure management, be it application maintenance, be it testing, BPO, in all these service line which is still a big percentage for all our competition including our self, client up front very clearly says they are looking at 30% to 40% savings over a contact duration," said Rao. "So, if that is not pricing pressure I do not see what is pricing pressure."
The pressure on pricing and increased competition has forced firms such as Infosys and Cognizant to cut their revenue forecast twice this year. Wipro expects revenue to be flat in the quarter to December. This has forced lobby group Nasscom to revise its growth forecast to 8-10% from 10-12% it had projected in April.
India's software exports stood at $108 billion last year.