Information technology exports from India may grow at a slower pace in 2015-16 because of macro-economic challenges, geopolitical tensions and currency headwinds.
The National Association of Software and Services Companies (Nasscom) has marginally lowered its estimates for IT and back-office services exports to 12-14 per cent for the year ending March 31, 2016, as against the 13-15 per cent estimated for 2014-15.
For the current fiscal year, the industry body said exports would rise by 13.1 per cent (in constant currency terms), which is at the lower end of its earlier guidance.
“With regard to exports, the concerns are mainly to do with the economic fluctuations in Europe, China and Brazil — regions on which a lot of hope had been pinned. Moreover, automation in key technology areas means that there will be demand, but for different kinds of services,” said R Chandrashekhar, President of Nasscom.
BVR Mohan Reddy, Nasscom’s Vice-Chairman, said that IT companies will have to brace themselves for unfavourable cross-currency movement in the next fiscal year. Local firms derive 30-45 per cent of their revenue from non-dollar currencies.
In the last year or so, the rupee has appreciated by 17 per cent against the euro, 7.5 per cent against the British pound, and about 13 per cent against the Australian dollar. Then, there is the overhang of worsening relations between the US and Russia (over Ukraine) and the impact it may have on clients’ propensity to spend on new initiatives.
For 2015-16, Nasscom expects domestic sales (including e-commerce) to grow 15-17 per cent. “The export guidance may look a bit lower when you look at the band (14-16 per cent), but we expect higher demand for domestic IT, augured by the phenomenal growth of e-commerce,” said Chandrashekhar.
This fiscal year, e-commerce revenue is expected to grow by 33 per cent to $14 billion from $10.5 billion the year before.
The Indian IT industry is on track to clock $300 billion in revenue by 2020, Nasscom Chairman R Chandrasekaran said, adding that it continues to be a ‘sunrise sector’ despite the near-term challenges. About 2.3 lakh new jobs were added this year by companies, Nasscom said. Next year, 2.0-2.3 lakh jobs are expected to be created.