India’s tech sector is likely to remain resilient to the global downturn

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India’s IT services firms may be better positioned to weather the global downturn than most other sectors because of the impact on spending, industry experts say. IT in the post-pandemic world can be limited.

With most companies realizing the importance of investing in digital innovation, even if they decide to cut their IT budgets, the sector may not see a downturn like the following: the 2008-09 global financial crisis, they added.

“The last few years, (especially covid) have proven that it is not possible without a digital presence. Jayanth Kolla, co-founder of market research firm Convergence Catalyst, said: “If companies have to cope with inflation or other economic uncertainties, they have realized that investing in digital innovation is worth investing in digital innovation. is a daily need.

“Things will become clearer in the next 2-3 months, but we can expect a 10-15% drop in total tech spending,” said Kashyap Kompella, founder and chief executive officer. , RPA2AI Research, said.

That said, IT services professionals are feeling the heat of rising inflation, geopolitical tensions, and recession fears. While analysts say the economic downturn in the US is unlikely to have far-reaching consequences for IT budgets, most companies are on standby and watch.

The slowdown in IT spending is reflected in the downgrade of India’s IT companies. For example, in May, US investment bank JP Morgan downgraded its IT services majors from neutral to mild, followed by Japanese financial services group Nomura downgrading India’s IT majors. Due to decrease in revenue.

The downgrade has boosted the sector, which is expected to hit $227 billion this year, according to industry association Nasscom, initiating a number of cost-cutting measures, according to industry association Nasscom. .

Kompella said IT companies have yet to trigger a slowdown in growth books, but some large companies’ “trillion-year-old IT projects” could see a slowdown. However, this won’t have much of an impact on day-to-day technology. He added, like IT and cloud maintenance.

Kolla does in fact see an “opportunity in crisis”.

“While companies may not cut their tech budgets, they can reduce travel costs and limit funding for highly experimental AI and AR/AR projects/ VR (augmented reality and virtual reality), instead focuses on core services, such as the cloud Kolla said.

“Crypto-related technology, which is still trying to establish a strong foothold, can be difficult,” Kompella said. ,” he added.

“In the past, recessions led to periods of high growth for Indian IT outsourcing businesses. For example, during the global financial crisis of 2008, India’s IT professionals saw annual contract values ​​exceed those of previous years, with the government, healthcare and manufacturing industries taking on export spending more”, said Anurag Dua, partner of EY India.

He added: “There may be a short-term spending cut, which will affect some digital projects, but newer models of diplomacy will see high growth. “As most Indian IT companies provide services to legacy businesses in sectors including government, manufacturing, banking and healthcare, the IT services business will remain strong. strong despite the economic downturn.”

Siva Prasad, Sales Director of staffing firm TeamLease Digital, said major IT services companies are building a strong roadmap for the coming months and show no signs of slowing down in hiring. .

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