 "IT industry bullish on exports growth")
Signaling that the worst times are perhaps over for India’s export driven IT services sector, industry body Nasscom on Tuesday gave a positive picture pegging the estimated growth in exports for IT and BPO services for FY15 between 13-15%.
The industry is expected to add $15 to $17 billion of incremental revenue next fiscal backed by improving economic conditions in the US and Europe, it said. At the same time, Nasscom also hinted that the nature and the scope of the future demand are going to be quite different with the social media, mobility, analytics and cloud (SMAC) suite of technologies going to be at the forefront of clients’ buying decisions.
This is one of the most bullish growth target given by Nasscom in the last couple of years. For the current fiscal, the industry body had started off by saying growth will be in region of 12-14%. The industry has managed a growth rate of 13%. In the last fiscal, the industry clocked a growth of 10.2%. This was much less that the original growth prediction by the body of 11-14%.
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“One should not just look at the growth numbers. There are number things are taking shape which are quite beneficial for the long-term future of the industry. For example, India is becoming a hub for the digital industry and creating an ecosystem of start-ups which itself will spur new avenues of growth,” said Nasscom president R Chandrashekar.
Although the growth estimates is much in line with the expectations of the industry, it comes after several years of subdued growth, especially after the global economic slowdown that started with the collapse of Lehman brothers in 2008.
For the fiscal year 2013-14, Nasscom had given a growth projection in the range of 12-14% and eventually managed to settle with a midrange of 13%.
“I think the growth projection is fair and not conservative since full recovery in various markets still hasn't come,” said Milan Sheth, a partner at audit and consultancy firm Ernst & Young. The market is upbeat but the concerns are whether recovery will be as fast as expected or whether as many contracts will be signed,' he added.
Cognizant, the Nasdaq-listed IT services company last week projected its revenues to grow 17% in 2014, causing concern that the 'conservative’ guidance may limit the growth prospects of the Indian IT/BPM sector in FY14. The company had also said that its growth projection is a reflection of what the company sees on the ground at present.
On the flip side, the domestic IT/BPM market is expected to be a laggard with a projected growth of 9-12% for FY15, primarily due to the fear of a slowdown in government in the election year.
For FY 2013-14, the industry’s export revenues are estimates to touch $86 billion when the overall revenues (including revenues from domestic market) are estimated to be $118 billion.
Nasscom also said that the industry has not yet come out with the challenges completely. These include uncertainty in the wake of approaching the general elections this year; currency fluctuation; global regulatory hurdles such as the US immigration Bill. “On the immigration bill, we have managed to move the needle a bit through dialogue with the US policy makers. But the next six to eight months are ‘critical’, said Krishnakumar Natarajan, chairman of Nasscom.