Leslie D`monte & Shivani Shinde, Mumbai
Business Standard
The unprecedented banking and financial crisis in the US will continue to tell on the revenues and profitability of Indian IT-BPO firms for at least a year.
Some analysts, in fact, opine that software body Nasscom may — for the first time — miss its revenue (software exports) target of $60 billion by FY09-10, even as the long-term IT story remains intact.
The short- and mid-term bearish sentiment stems from the fact that the US and UK account for almost 80 percent of the revenues of all-Indian IT firms. The crisis is spilling over to the UK too, where Indian IT firms were finding succour by de-risking geographically.
The banking, financial services and insurance (BFSI) vertical — which has been affected the most by the sub-prime crisis — accounts for slightly over 40 percent of India’s software sector revenues.
Avinash Vashistha, chairman and CEO, Tholons, said Nasscom’s revenue target of $60 billion by FY10 "seems to be difficult to achieve". The target of $40 billion for FY08 too "appears challenging," he added.
"We do see ramp-ups to begin from Q2FY09, but for the Indian IT firms to manage to get growth rates above 25 percent will be difficult. For BPOs, the next quarter might see some announcements in terms of change in the guidance," he predicted.
Som Mittal, president, Nasscom, admitted that this week’s global crisis will have an impact on the Indian IT industry but added that it's difficult to quantify the exact impact at this point of time.
However, Edelweiss analysts note that the negative segment has hurt other emerging verticals like retail (which accounts for around 8 percent of revenues) and manufacturing (around 15 percent), which is being affected in pockets (like automobiles).
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