Bangalore : The Indian IT industry will retain employees but will go slow on hiring this fiscal (2008-09) following declining growth rate, the organisation representing the industry said here Wednesday.
“No job cuts. Hiring will be less in this fiscal compared to previous years as IT firms are cautious about their business prospects in the short and medium terms due to global recession and financial meltdown,” National Association of Software and Service Companies (Nasscom) president Som Mittal told reporters.
Admitting that the downturn would impact the industry in terms of higher growth rate, aggressive hiring and investment-driven expansion, Mittal said Nasscom would come out with a mid-annual review of the industry outlook for this fiscal in the third week of December.
“We will re-visit the growth rate of 21-24 percent projected in June for this fiscal, after studying the feedback from our 1,200 member companies, including 250 global firms. After three-four years of about 30 percent annual growth rate, the industry is facing slower growth rate on a wider base,” Mittal said.
With attrition rates dipping and utilisation rates improving, companies are on a consolidation mode to make best of the difficult times.
Though the top 10 global Indian firms such as TCS, Infosys, Wipro, Satyam and HCL are likely to maintain their projected hiring this fiscal, a few companies operating in niche areas or catering to verticals impacted by the meltdown could retrench staff and freeze fresh recruitment.
“Because of value proposition, high talent pool and cost arbitrage, the Indian IT industry will continue to be in demand for outsourcing, back-office operations and value added services. In our estimate, the industry will return to high growth rates in the next 12-18 months,” Mittal said.
Nasscom has advised members to explore emerging and new markets to sustain the growth momentum and acquire domain expertise in new verticals.
“This is the time to invest in domain expertise to broaden the service offerings and move up the value chain with innovation. Though the US and Europe account for about 90 percent of the IT export services, it is high time we look at other markets such as Latin America, Eastern Europe, the Middle East, North Africa and the Asia-Pacific region to ensure we remain risk-free during global meltdown in future,” Mittal said.
Dispelling fears of doom and gloom engulfing the Indian IT industry, Mittal said as part of the global delivery-supply chain, a majority of firms, including multinational and captives are integrated with the world.
“Unlike in manufacturing and productive sectors, the services sector will continue to flourish as it is part of the non-discretionary budgets. In view of the global recession and slowdown in IT spending, decisions in discretionary spending on new service lines, expansion and product upgrade are being postponed,” he said.