Growth a big challenge for Indian IT in FY21

Bengaluru: With business of most of its clients getting impacted by the coronavirus outbreak and likely lower discretionary spending as a result, growth for India's IT services sector is going to be a big challenge in the coming fiscal, an industry veteran said on Wednesday.

There will be impact on Indian Information Technology industry for multiple reasons, former Chief Financial Officer of Infosys Ltd V Balakrishnan said.

With restriction on movement of people following the scare, Indian IT companies' ability to deliver services on-site could get severely impacted but that could be addressed to some extent by working remotely, he said.

According to him, most of the clients of the industry --airline, retail, oil and gas and financial services-- are getting impacted following the coronavirus outbreak. "So, it will have a drastic impact on discretionary spending and some of the digital spending (by clients)," Balakrishnan said.

"Of course, it will happen with a lag, may be one quarter. Probably you will see its full impact next year." He said revenue growth for the Indian IT industry would get impacted.

"To me, it looks like 2008 (global economic and financial meltdown). But the issues are different. We don't know how long this is going to continue," he said.

According to him, global markets such as the US, Europe and Japan are already witnessing significant slowdown in economic growth.

"That will have significant impact on spending. I think next year, the growth for Indian IT services industry is going to be a big challenge," he said.

"It's (now) exactly like 2008 when everything got shut down over a period of time but again recovery then was in a V-shape because central banks and all got in and stabilised," Balakrishnan said.

"Now, I think central banks are helpless; interest rates are almost zero in most parts of the world. I think the pain is going to be similar to what we saw in 2008 and we don't know how long this is going to last.

You will see the impact on guidance and revenue growth (by Indian IT companies) for next year. Next year, growth is going to be very challenging for Indian IT services industry," he added.