IT industry feeling slowdown heat but optimistic: Infosys

Speaking on the sidelines of the India Economic Summit, which began in New Delhi on Sunday, Infosys co-founder and co-chairman Nandan Nilekani said India's IT firms are bracing for "unprecedented" challenges and is responding to decline in outsourcing orders and fall in earnings by adopting cost optimizing measures and diversifying their clients' portfolio geographically.

Though the US market continues to fetch Indian IT firms about 50-60 percent of their revenues every year, slowdown in the US market has forced the firms to look to Latin America, Africa, Middle East, Europe, Japan and China to diversify their client base.

"Growth in the IT sector will be slower. There is a overall slowdown which is understandable given the crisis. The growth in the IT sector during the current fiscal will not be as good as witnessed for the last four years. In the current environment it is definitely not going to happen," Nilekani said.

Nilekani's warning comes at a time when companies across industries are cutting down on production, rationalizing their workforce, reducing work hours and bench strength, retrenching employees and going slow on hiring process to tide over the ongoing financial crisis.

However, Nilekani said the IT industry is "resilient enough to meet the challenges" and will bounce back.

"I am sure the companies are following the right strategies. They are waiting for the things to subside and take advantage of next cycle of growth," he said.

Agrees Infosys CEO Kris Gopalakrishnan. "The IT services industry will emerge stronger as after the crisis because the global delivery model that the industry follows, and also, the IT services industry has reached a certain scale, maturity, strength and world class practices," he said.

According to the National Association of Software and Service Companies or Nasscom, the consortium that serves as the apex body of the Indian IT software and BPO industry, India's IT-BPO industry enjoyed about 30 percent growth in previous years but this year it is projected to be at 21-24 percent due to the ongoing financial crisis.

India's software and services exports stood at nearly $40.4 billion during financial year 2008, up from $31.4 billion in the previous year, with the US as its largest market. The revenue of overall IT-BPO industry, including the domestic market, recorded 28 percent growth to touch $52 billion in financial year 2008.