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IT: Cheery forecast fails to lift mood

February 14, 2013 11:40 IST

ComputersThe information technology industry body, Nasscom, has pegged a better growth rate for FY14. But the industry does not seem convinced.

On Tuesday, Nasscom announced at its 21st Leadership Summit that it expected the sector to grow 12-14 per cent in FY14, better than the 10.9 per cent growth it would report for FY13.

However, many felt the 12-14 per cent growth target might also not be possible.

“I think it reflects the overall cautionary sentiment in the industry. In the case of Nasscom’s growth forecast, I think it’s more about ‘once bitten, twice shy’.

They do not want to stick their neck out and predict a really bullish growth rate," said a senior executive of a leading IT services company.

Lakshmi Narayanan, vice-chairman of Cognizant, said while the company was more optimistic than last year, it does not want to be gung-ho about it. He said the 12-14 per cent growth forecast of Nasscom is realistic.

“We always look at the growth from the perspective of the top four or five companies. But if you look at the kind of growth the captive centres of global companies in India, it is very high. All of them are ramping up,” he said.

Cognizant has given a revenue growth guidance of 17 per cent (16 per cent excluding the expected acquisition the company wants to make) for CY2013.

This is being perceived as a conservative guidance, given the fact that the company saw growth of 20 per cent in FY12.

“If you look at last year, there were only a handful of companies that maintained their guidance.

"Both Infosys and Cognizant revised their guidance downwards. Besides, some of the real growth is happening among the mid-cap companies that get overshadowed by the growth rates of the larger peers,” pointed out a CEO of a mid-cap firm that has tracked a growth rate of upwards of 25 per cent.

Industry players added that though the theme of the Summit is ‘Imagineering the Future: Disruptive Innovation for Sensible Growth’, most of the sessions focused on existing challenges rather than innovation and disruptive technology.

V Balakrishnan, director and head of the India geography, Finacle, and the BPO business at Infosys, said: “It is very difficult for anybody to take a long-term view in this market based on where we are here. Still, the world has not changed.

"Still, negotiations are on the fiscal cliff front; Europe is still evolving; it is very difficult to give projection for the next year in this environment.”

According to the senior executive of a leading BPO firm, the mood is “much more sombre this time around than last year”.

Nasscom needs to shake itself and focus what needs to be the future course of the industry, he added.

Perhaps Nasscom should take a cue from what Mike Walsh, futurist and author, said: "Innovation is moving away from sterile R&D labs to messy disruptive ideas that meet the needs of the market."

While the mood on the first day remained subdued, Nasscom’s summit is expected to see participation of around 1,800-2,000 delegates over the next three days.

N Chandrasekaran, CEO and managing director of Tata Consultancy Services and chairman Nasscom, said: “For the first time the domestic IT, growth rate has outpaced the export rates,” he said.

Shivani Shinde and Bibhu Ranjan Mishra in Mumbai
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