Nasscom Predicts 11-Percent Growth for IT Sector

For decades, the IT and business process outsourcing sector remained a major growth catalyst for Indian economy. Upcoming days may not be as promising, but the IT/BPO sector in the country will manage to meet the lower end of its growth expectation for this financial year, according to The National Association of Software and Services Companies (Nasscom).

Nasscom cited three reasons for this projected slowdown, namely the currency volatility, low growth for global in-house centers and the differentiated growth for various players.

It would be relevant to mention that at the beginning of the year, Nasscom had given a growth guidance of 11-14 percent. Now Nasscom predicts that the industry will witness a 11-percent growth. The revenue for the sector has been estimated at $75 billion-$77 billion.

The estimates are based on analysis of Indian listed companies, multinationals, global in-house centers and various industry sectors such as IT services, business process outsourcers, engineering, research & development and products.

India’s top IT services firms have been facing hurdles in the recent times, with the top four to five providers accounting for 40-45 percent of overall export revenue. Infosys gave a revenue guidance of just 5 percent for this financial year, while Wipro (News - Alert) continued to grow at one to 2 percent on a quarterly basis.

However, another IT giant TCS had different tale to tell. Chairman of Nasscom and chief executive and managing director of TCS, N Chandrasekaran, maintained that TCS not only crossed the $100 billion mark last year, it claims to still have enough opportunities to make the industry double its size. To be able to do so, TCS has reportedly set up a committee under N R N Murthy.

“You have to see the growth guidance in the light of challenges such as delayed decisions and low visibility. Each company has a different story, a different growth rate and slowing of some of the select verticals. As an industry, we have been under-invested in verticals. We have seen faster growth in verticals like retail and healthcare,” Nasscom president Som Mittal said in a statement.

Nasscom said remote infrastructure management, business process outsourcing and testing were the growth drivers.

Sudin Apte, principal analyst and chief executive, Offshore Insights, said, "We had maintained the industry would manage to grow eight to 10 per cent for FY13. But this is the average for the overall industry. Individually, some companies would do better. The good news is 2013 and 2014 seem better than this year."

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