Ratings agency ICRA in its latest report has said that the Indian IT services revenue are expected to remain flattish in US dollar terms in FY21 as compared to previous estimate of a negative growth, helped by acceleration in demand for digital services. It said while coronavirus disease (covid-19) pandemic remains an ongoing concern, enterprises have shifted to virtual models that have pushed the acceleration and the credit profile of Indian IT services companies is expected to remain stable.
According to the report, the global spread of the covid-19 has resulted in simultaneous supply and demand shocks. It noted that IT Services companies have managed to overcome supply led challenges through uninterrupted delivery of IT services, through work-from-home model but the challenges on the demand front continue to persist. It also said the US and the Eurozone, which generates more than 80 percent of IT services export revenues, will see their GDP contract in CY20, and the first half of FY21 will also see impact in the form of price discounts and extended furlough requests by clients as they restructure their businesses.
The report further said as a silver lining, the covid-19 pandemic is accelerating the secular trends of core modernization, usage of collaborative technologies and cloud migration as companies shift to digital business models to pursue work-from-home model which will benefit IT services companies.