Surabhi Agarwal
The Financial Express
The continuation of the STPI scheme beyond March 2010 has a stronger case now with global economies in the tailspin said Ganesh Natarajan, chairman, Nasscom. The Software Technology Parks of India (STPI) scheme, which was meant to be a 10-year tax-holiday for companies, was originally set to end by March 2009 but was extended by a year till March 31, 2010.
“It was the global industry that put India on the IT map. With the economic meltdown, the STPI should get an extension,” said Natarajan. IT companies are facing an increased pressure due to the slowdown in the US and the UK markets, which contribute around 90 percent to the revenues of the Indian IT industry.
Stating that the need for the tax holiday is much more now, Natarajan said that the industry body will enter into a dialogue with the new central government (after the general elections next year) post July August on further extension of the STPI.
Talking about the impact on the IT industry, Natarajan said that companies will continue to see around 30 percent growth in their topline, while the bottomline growth could be nil next year. “The industry should grow at 15-20 percent despite the adverse scenario, compared to the 20-25 percent growth rate expected before,” he said.
While the work outflow in applications support, maintenance and implementation is expected to continue, new application development like ERP could come to a grinding halt in the short term, said Natarajan. However, he stated that clarity would only come by January next year when the budgeting season starts and the impact is somewhat absorbed by global companies.
Nasscom had earlier predicted employment of 2,75,000 jobs this year, which will get trimmed to around 2,00,000 now. He added that the industry continues to hire though the recruitments are restricted to specific tasks. “Bench hiring is a little low and utilisation rates are going up,” he said.
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