How Bad Is IT?
- In a first, large IT players are showing falling revenues, weak guidance. Profitability is under pressure too.
- Recession-hit US & UK clients are delaying projects, decisions. Sizes of contracts are gradually getting smaller.
- IT firms facing pricing pressure. Contract prices being revised 5-15 per cent downwards for most firms.
- No increments. Bigger IT firms have announced salary cuts for senior staff.
- Top IT services firms not going for fresh H1B visas; US firms reluctant to hire foreign workers
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Is The IT Boom Over?
- IT sector growth expected to fall from 15 per cent to around 9 per cent in the next year, flat growth in the next 2-3 quarters
- Billing rates will continue to be subdued for the next couple of years, hiring strictly on need basis
- Smaller players will find it difficult to survive; there will be increased M&A activity
- Analysts say no sign of recovery for over two years, IT stocks likely to underperform
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The Worm Turns
The IT sec tor isn’t used to plunging graphs. What will happen after the current dip?
- 2.1% Fall in profits of India's largest IT services firm TCS*
- 1.5% Fall in revenues at TCS for Q4, 2008-09, compared to Q3
- 3.1-6.7% Infosys' expectation of revenue fall next financial year
- 2,100 Number of people Infosys sacked in April 2009
* For Q4 ’08-09 vis-a-vis Q3
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By Arindam Mukherjee with Ashish Sen in Washington
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