IT companies likely to be hit by weak outlook in US, Europe
09 Jul 2012
Uncertainty over by US and European clients in a weak global economy is likely to hurt the earnings of Indian outsourcers, muting hopes of a pick up in demand in the second half of the year.
The $100-billion IT and back-office outsourcing industry earnings depends for around three-quarters of its revenues on customers in the US and Europe.
No 2 ranked Infosys is the only one among the top-three vendors to provide a full-year forecast. The company has cut its revenue growth estimate for the current fiscal year to as low as 5 per cent when it posts quarterly earnings on 12 July.
In April, the company had forecast 8-10 per cent growth for the fiscal year ending March 2013, which came as a huge disappointment who pulled it down by 13 per cent of its market value on the day. The company has gained around 2 per cent since then.
According to the National Association of Software and Service Companies, or Nasscom, an industry lobby, the industry was expected to grow exports by 11-14 per cent in the current fiscal year ending March.
Meanwhile, customers are holding discretionary spending as the euro-zone crisis continues unabated and data continues to give no clear indication that the much awaited economic recovery was under way in the US, the biggest market for Indian companies.
