In the backdrop of global macroeconomic headwinds, Britain’s vote on exit from the European Union, and barely a week after Donald Trump was elected as the next US President, Indian software association Nasscom lowered the country’s IT export growth estimate to 8-10 per cent for 2016-17, compared with a 10-12 per cent projection made at the beginning of the financial year.
Global uncertainties like Brexit vote, post the US election dynamics, currency volatility and a slowdown in the already discretionary spending of the banking, financial services and insurance industry, were the causes that would have an impact on the IT sector’s growth, Nasscom president R Chandrashekhar said, adding that the short-term political and economic uncertainties could last over the next two quarters.
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“The industry is going through a transient phase with various domestic and global factors impacting its performance. While the effect of various short-term factors may show for a couple more quarters, the worst is behind us. Global projected growth for the industry is high and our share remains strong. We are confident that the sector will continue to re-invent itself by investing in digital technologies and competencies, to drive consistent and sustained growth,” Chandrashekhar said.
Nasscom also expects the incremental revenue addition to be between $8-10 billion in 2016-17, compared with $10 billion in 2015-16. The export revenue growth, in constant currency terms, was 12.3 per cent during 2015-16.
Even though during Donald Trump’s campaign, a lot was said about immigration and visa issues that could affect the Indian IT industry, sector’s leaders are depending on Trump’s business credentials, and have expressed hope that he would not push through with his pre-election anti-outsourcing rhetoric, given the key role the sector plays in keeping American economy competitive.
Last month, Wipro registered a drop in second quarter net profit and warned that revenues in the October-December quarter could be impacted by a “mixed demand environment”. TCS and Infosys posted muted growth numbers for the second quarter as well and said they are witnessing softness in the banking and financial services sector and client spending.