TCS, Infosys and HCL will be hit by the reduced technology spending by clients in the US and Europe.
Bengaluru | Mumbai: India’s giant IT services companies will see a significant slowdown in growth during this financial year as they grapple with the upheaval wrought by the Covid-19 pandemic, according to analysts.
Top software exporters – Tata Consultancy Services, InfosysNSE -0.95 % and HCL TechnologiesNSE 0.68 % — will be impacted by the reduced technology spending by clients in the US and Europe following lockdowns across the globe, experts said.
Brokerage HDFC securities expects revenue of the IT sector to reduce by 2-7% due to a slowdown in decision making in the next six months while businesses evaluate the impact of the virus that is disrupting the global economy.
“We expect revenue in the (first two quarters of this financial year) to be largely impacted by delay in pipeline conversion and pricing impact on core business,” wrote analysts Apurva Prasad, Amit Chandra and Vinesh Vala in a note.
India’s software and services exports grew 8.1% to $147 billion in fiscal year 2020, according to the National Association of Software and Services Companies.
“In the near future, IT companies could feel the heat of pricing pressure, revenue loss due to lockdown (in India and many countries globally), client bankruptcy and slower client decision making led by lower discretionary spends,” wrote Devang Bhatt at brokerage ICICI Direct.