Monday, April 27, 2009

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Indian IT industry faces slowdown

Amidst a worsening macroeconomic scenario uncertainty continues for Indian IT services. Even a falling rupee has failed to prop up rupee revenues as volumes shrink. With Wipro and HCL Technologies declaring their results on Wednesday, the numbers for all Tech biggies are out.

Azim Premji, chairman of Wipro, said, “Environment looks tough ahead.” While TCS and Infosys saw sales dip over one per cent each, Wipro and HCL Technologies saw negligible organic growth. Profits too were pressured with HCL Tech taking a big Rs 200 crore knock on forex losses.

Margins also contracted for most. Moreover, the billing rates are also coming down and despite companies freezing wages, cutting back on expenses and trimming operations, margins remain under pressure.

Vineet Nayyar, CEO of HCL Technologies Ltd, said, “Q3 volume growth is flat and EBIT margins are down just 47 bps.”

Well, the outlook for IT services players is grim with Infosys and Wipro projecting a 4-5 per cent decline in revenues in the next quarter.

Owing to the economic downturn, apex industry body Nasscom has delayed its IT export revenue target of $50 billion to 2011 from 2010 earlier.
Industry experts believe the BFSI demand may recover by second half of 2009. Meanwhile companies are focusing on cost-cutting and higher offshoring to sail through these tough times.


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