Nasscom downgrades IT growth outlook to 8-10% from 10-12% in FY17

The IT industry body National Association of Software and Services Companies (NASSCOM) has downgraded the growth prospects for India’s IT exports this year to a range of 8-10 percent, from  its earlier forecast of 10-12 percent, citing uncertainties arising from growing anti-globalisation rhetoric in the developed world. This will be the second time that Nasscom has projected single-digit growth in a decade after the industry saw its lowest growth of five per cent in 2009-10 in the aftermath of the banking meltdown in the US.

Nasscom said that the export revenue is now expected to be $116-118 billion in 2016-17, as against $119-121 billion projected at the beginning of the year in constant currency terms. A cut in industry revenue guidance was expected as Infosys and Cognizant have cut their annual revenue forecast, while Wipro has forecast flat growth in the quarter to December. Further the industry body said that the global political uncertainties like Brexit and post-election dynamics in the US, economic uncertainties like currency volatility and GDP decline in key markets and slowdown in financial services, energy and telecom are all impacting the industry's revenue growth. Though, it emphasised that its long term targets for the Indian IT industry remain unchanged and the sector is on track to reaching $350 billion revenue mark by 2025.

Nasscom president, R Chandrashekhar has said that the industry is going through a transient phase with various domestic and global factors impacting its performance. While the effect of various short-term factors may show for a couple more quarters, the worst is behind us. He added that Indian firms will have to enhance their digital capabilities and re-skill themselves, to stay globally competitive. On whether the new administration in the US under President Donald Trump would impact business prospects of Indian tech industry given his anti-outsourcing posturing, Chandrashekhar said that economic realities will ultimately lead to a more balanced and measured approach. He added that the export-led Indian IT industry derives over 60 percent of its revenue from the US.