After a sluggish 2012, industry analysts have turned into fence-sitters as they struggle to forecast the prospects for the Indian IT sector in the new year. The industry also wants the RBI to take a look at the interest rates, which RBI has kept unchanged to fuel growth in India.
“Deceleration of growth in India has bottomed out and we can look at 7—8 per cent GDP growth next year. The momentum is building up,” said Kris Gopalakrishnan, Co-Chairman, Infosys, at a CII event.
The reason for such a stance is because of mixed signals coming from the two biggest spenders in the outsourcing sector, the US and Europe. For example, Morgan Stanley in a report said that despite uncertainty in Europe, technology spending by US companies could be stable in 2013. Further, it does not expect outsourcing projects to be disrupted due to the economic conditions in the US and Europe.
However, he had a word of caution for the industry. “We are going to see a period of uncertainty, probably for the next three to five years when some event or the other which could trigger reaction or panic or may slow things down further. Currently from where we stand, 2013 could probably be better,” he added.
Scepticism over projections
According to Nasscom, the Indian IT sector is expected to post an 11-14 per cent growth in the 2013 fiscal but an increasing number of IT companies are voicing concerns over the projections.
In the last week, Cognizant and TCS have said that they are seeing continued growth pressures due to fewer working days and growing reluctance of clients to spend on outsourcing due to a different economic situation arising out of tax increases, spending cuts by the end of 2012.
Cognizant, in a recent SEC filing said its top executives would receive 100 per cent of their performance-linked shares if the company achieves revenue of $8.5 billion next year, a 16 per cent rise over its projected 2012 revenue. In 2012, Cognizant cut back its initial revenue growth guidance from 23 per cent to 20 per cent and now to 16 per cent.
Further, Infosys, according to analysts, is expected to reduce its guidance from 5 per cent to 3.8 per cent for the 2013 fiscal as its clients are postponing their decisions to spend on outsourcing projects. “We will have to wait and watch to see whether the fiscal cliff issue is resolved but we are still guarded,” said Shami Khorana, President, HCL America.