Conclusion
With a series of bad news emanating from US, it would be wishful thinking that the worst is over. So far, the turmoil has had significant impact on investment banks, which are not the largest IT spenders. If commercial banks are hit, we have a bigger problem on our hands.
According to the US-based banking research firm, Institutional Risk Analytics, nearly 110 small banks and financial institutions could fail between now and July 2009. And until the pain is completely out of the system, it is difficult to expect that the investor sentiment will improve.
"Sentiments will change only when clarity on the client front emerges. And it is unlikely this will happen over the next two quarters," thinks Amar Ambani, head of research, India Infoline. Analysts expect the IT budgets for the next calendar year to be pushed well beyond December.
Nasscom has forecasted that the country's IT and BPO exports would grow at a slower pace of 25 per cent in the current fiscal, as compared to 29 per cent growth witnessed last year.
The industry body has expressed its concerns over the industry meeting the revenue (software exports) target of $60 billion by FY10, even as the long-term IT story and the case for outsourcing on account of skill sets, labour arbitrage and proven processes, remains intact.
Manoj Mohta, head of research, CRISIL puts up a brave front when he says that post US presidential elections and consolidation among the BFSI companies, the Indian IT industry should be back on track, in increasing its current market share of close to 12 per cent of total global offshore business.
He also believes that the industry will have to live with a stable 20 per cent growth rate and could well be a defensive sector in the long term.
Image: The Indian Tricolour flies high. | Photograph: Simon Cross/Getty Images
Also read: The classy new Hyderabad international airport
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