S Gopalakrishnan, CEO, Infosys Technologies, the country's second largest IT services company, said on the sidelines of the CII services conclave that the growth rate of overall Indian IT and ITES sector may slow down to about 15 per cent this fiscal, compared with about 30 per cent notched during the previous year.
While the slow down was expected, a 50 per cent anticipated reduction in the growth has come as a rude shock.
In July 2008, while announcing the findings of its annual survey on the performance of the Indian software and services sector (excluding hardware) for FY07-08 and outlook for FY08-09, Som Mittal, president, NASSCOM, said, ''The Indian IT-BPO industry's resilience is reflected in its FY07-08 performance, with a 28.2 per cent overall growth rate and next year's projected growth between 21-24 per cent. Given that we are well on our way to achieve the target of $60 billion in exports by FY09-10, the industry is now focusing on improving productivity, efficiency, as well as opening up new markets and services''.
Cutting cost has become the order of the day with IT companies, as it is the survival of the fittest. Infosys has enforced a virtual hiring freeze as it has met its target of hiring 25,000 people for the fiscal year ended March 2009. While Infosys is still hiring for specific skills, overall their HR targets have been met. It has hired a gross of 17,299 employees already, besides making around 20,000 campus offers.
In the last quarter Infosys has hired approximately 6000 employees most of them being trainees.
The financial results of Infosys have showed signs of the global recession. The second quarter ending September 2008 shows a net profit after tax growth of 30 per cent over the second quarter of 2007. It has also met all its performance targets in absolute terms. However due to the rising rupee the guidance has come down 16-18 per cent. This however should be reversed the coming quarter since the rupee has fallen to Rs50 per dollar.
Nearly 62 per cent of its business comes from the US and this has remained unchanged over the last year. In fact, 99.8 per cent of its business is repeat business, which has enbled it to contain the increase of its sales and marketing costs to just 7 per cent in the last quarter.
(Also see: IT majors' captive BPOs gain strength amid global slowdown)