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BW Businessworld

‘IT Sector More Driven By Politics Than Technology Today’

The curb on H-1B visa, increasing emphasis on automation and an attempt to reduce cost of production has led Indian IT sector go through its worse phase since the 2008 global financial crisis.

Photo Credit : Shutterstock


The Indian Information Technology (IT) sector is witnessing its worst slowdown since the global financial crisis of 2008. The sector is facing headwinds due to political uncertainties in the United States (US) and parts of Europe.

A report by National Association of Software and Services Companies (NASSCOM), premier trade body for the IT-BPM sector in India says, “India’s IT-BPM industry is feeling the impact of the global slowdown and global political uncertainties as clients go slow on their decision-making and investment processes. The industry is projected to grow nearly 7.8 per cent in FY2017.”

Further, the growth forecast for the financial year 2018 is also estimated to hover around just 7-8 per cent, which means the growth is likely to remain under pressure. This growth forecast is the lowest in the last 13 years, except for 2010, when the industry faced the consequences of financial crisis.

Kunal Nagarkatti, chief operating officer, Clover Infotech pvt ltd told BW Businessworld, “The Indian IT sector at this point of time is driven more by politics rather than technology. United States have taken a strong move against immigration which is sure to impact the IT sector companies, especially the ones which draw business hugely from outsourcing. India per se will be affected as our country is an outsourcing hub.”

The IT sector has seen large number of layoffs in the recent past. HfS Research, a US-based business advisory firm, estimates automation could mean a 14 percent decline in India's IT workforce with 480,000 jobs at risk by 2021. The report by NASSCOM also highlights that Indian IT exports is likely to remain stagnant this year.

However, as per the report, the industry is also expected to benefit from positive factors, such as improvements in financial services and digital businesses, while focusing on increasing investments in digitization and automation

“The business of IT sector is not endangered. I see a lot of growth in product development and towards the end of this year; the scenario might change as the anti-globalisation drive has completed a full circle. Things keep repeating over a period of time. Once the cost structures in the foreign market changes, they will again look at cheaper places for outsourcing,” adds Nagarkatti.

The IT sector is also optimistic of the benefits from the goods and services tax (GST) roll-out. “GST roll out will create lot of opportunities in the sector on the business and technology side as well. With Gulf countries coming under GST mode of operation, things seem even brighter. It will streamline business,” explains Nagarkatti.

The IT industry is changing fast with the digital segment increasingly getting stronger, which could augur well for the Indian IT industry and help the industry get back on the growth track.