Indian IT industry to slow down - by ghosh_888
Wipro and its peers in the $31-billion (Rs 1,24,000-crore) Indian IT industry has come to the realisation that the fastgrowing sector is about to hit some speed breakers. The reason: the global banking and financial services industry (BFSI), from which the IT industry earns over 40 per cent of its revenues, is in unprecedented turmoil and the ripple effect could extend to other key contributors such as retail (if spending in the industry falls) and, perhaps, manufacturing.
The Indian IT industry, which was growing at over 30 per cent till as recently as last year, may now have to be satisfied with a more realistic 15-20 per cent annual growth. Buffeted by the subprime crisis, financial services companies are taking longer to decide on new or renewal of contracts and this is beginning to bite, as they look to extract lower billing rates from their IT vendors.
Bigger Indian IT companies have shown little growth in their BFSI businesses; and pricing for leading players (like TCS) remains flat at around $72 per hour (Rs 2,880) onsite and around $27 offshore (Rs 1,080).
TCS has already reacted to these storm clouds, offering to pay the transition costs of moving work offshore for some banking clients. TCS reported the weakest set of numbers among its peers. Revenues grew a mere 2.9 per cent QoQ, 2 per cent below estimates, and EBITDA margins were down 120 bps.