Turbulence in the global financial markets could translate into nasty surprises for the Indian software industry.
Even as the US government pushes through a $700 billion bailout package, the fallout of the collapse of marquee names in the US financial services sector spells trouble for the export-dependent Indian software sector.
Geographically, the sector gets over half of its revenues from the US, and based on verticals, a third of the total revenues flow from the BFSI segment. If the systemic financial collapse affects sentiment and growth of other sectors, then the IT sector could well face its toughest times since its many years.
The events of Wall Street have not escaped the attention of investors on Dalal Street who have hammered the IT scrips. The BSE IT index has underperformed the BSE Sensex over the last one year, with the former declining 30.3 per cent as against Sensex's decline of 23.6 per cent.
In the last 15 days too, the IT index was down 15 per cent as compared to the Sensex's decline of just 6.4 per cent. Notably, this underperformance comes even as the Indian rupee has seen a decline in its value against the US dollar in the recent past.
To know how these various developments are likely to impact the sector and companies, and what can be expected over the next one year, The BS Smart Investor spoke to various industry and investment experts.
Image: Nasscom president Som Mittal at a conference in Bangalore. | Photograph: Dibyangshu Sarkar/AFP/Getty Images
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