IT sector likely to see better prospects as US economic growth seen boosting tech spending

With the US economy doing well, Indian IT companies can look forward to a better year in 2018 on the back of growing tech spend and demand from clients, according to senior industry figures.

PTI October 23, 2017 15:38:17 IST
IT sector likely to see better prospects as US economic growth seen boosting tech spending

Hyderabad - With the US economy doing well, Indian IT companies can look forward to a better year in 2018 on the back of growing tech spend and demand from clients, according to senior industry figures.

Noting that the largest market for Indian IT companies is the US, former CFO of Infosys V Balakrishnan said their ability to grab growth opportunities is critical.

"(The) US economy is doing extremely well. I think they are still growing 2-2.5 per cent, good growth for that economy," he told PTI.

IT sector likely to see better prospects as US economic growth seen boosting tech spending

A computer network cable is seen above a Chinese flag. Reuters

"If you look at the Gartner report, they talked about overall IT spend going up by 4-4.5 percent this year. I think there is growth. The ability of the company to take on growth is critical. I think growth opportunities are there," added Balakrishnan.

He said if the world's largest economy is doing well, Indian IT companies "have a hope".
"They (the US) are talking about raising interest rates because growth is good, unemployment rate is very low, (US President Donald) Trump is talking about cutting corporate tax, so the economy is doing well. As long as the US economy does well, there will be opportunities for Indian IT
companies," Balakrishnan said.

On Nasscom projecting Indian IT export to grow 7-8 percent in 2017-18 and domestic market expanding 10-11 percent, he said "it looks okay for the year".

"But I think the next year should be good if things continues to do well," Balakrishnan said.

Another ex-CFO of Infosys, T V Mohandas Pai, said he has read many analysts' reports in the US that indicate that "the work is coming to big system integrators because tasks have become complex".

"I spoke to industry people and they say digital work for all big companies is growing in double digits. Rest of the traditional business is not growing much. Digital is growing very rapidly and for the big fellows digital is 20-25 percent of business. So, I think there is good growth," Pai said.

According to Balakrishnan, overall global IT spending is around $3.7 trillion every year.

"Of that, one-third is IT services; so there is still a lot of spending happening on the legacy side which goes into maintenance and building some core applications. That has not gone away.

"The incremental spending is happening in the digital area, and there, companies are building capabilities trying to play to ecosystem and go to the clients. Both are happening. I don't think the legacy services are totally gone. A large part of it is still there," Balakrishnan added.

Updated Date:

also read

No boots on the ground but 20 years on, war on terror still grinds along
World

No boots on the ground but 20 years on, war on terror still grinds along

The financial drain from a sprawling counterterrorism campaign has been vast, fueling the military’s budgets even years after major combat in Afghanistan and Iraq ended

N Korea slams US over submarine deal with Australia, warns countermeasures
World

N Korea slams US over submarine deal with Australia, warns countermeasures

Nuclear negotiations between Washington and Pyongyang have stalled since the collapse of a second Trump-Kim meeting in 2019

End of 'Merkron': EU's power couple of Emmanuel Macron and Angela Merkel prepare to bow out
World

End of 'Merkron': EU's power couple of Emmanuel Macron and Angela Merkel prepare to bow out

Merkel is to relinquish power after German elections on 26 September, bringing an end to her 16 years in office that has seen her work with four different French leaders