Nasscom ends annual growth forecast, says industry faces major risks from increasing protectionism, lack of talent
The apex software industry lobby Nasscom on Wednesday ended the practice of forecasting annual growth and said it was cautiously optimistic about 2019, citing rising global economic uncertainties arising out of trade wars and protectionism
Nasscom chairman Rishad Premji said they were discontinuing the annual growth forecast from this year
Last year also, the association had first delayed the announcement in February and later issued the projections in May
Nasscom president Debjani Ghosh said guidance is a thing of the past and not the right thing for the future
Mumbai: Software industry lobby Nasscom on Wednesday discontinued the practice of giving out revenue growth forecasts for the $180-billion industry, and chose to offer only guidance under which it is "cautiously optimistic" about FY20 given the increasing global macroeconomic headwinds.
The National Association of Software and Services Companies (Nasscom) marked out growing protectionist tendencies and the lack of talent as key challenges facing the industry and arresting faster growth.
The industry achieved an export growth of 9.2 percent in fiscal 2019, which is above the estimate of 7-9 percent the lobby had come out with in May last year.
Nasscom has been having a practice of coming out with an estimate on industry's revenue growth every February for the next fiscal year. Last year, it did not come out with a guidance in February, but pushed it May because of difficult market conditions.
It can be noted that some players in the industry, especially the bigger ones who do share a revenue growth guidance themselves, were unhappy with the Nasscom practice as their performance used to be benchmarked against the official industry forecast.
Nasscom revealed details of the survey of chief executives which it does illustrating the soft sentiment among the key decision0makers in the industry.
Association chairman Rishad Premji Wednesday said the decision not to offer a growth estimate number is taken "philosophically" by Nasscom, but underlined that it must not be connected with difficulties it sees for the current fiscal.
He said there can be "deductions" based on the findings of the CEO survey and people can guess the industry's performance based on that.
Its president Debjani Ghosh said the entire industry landscape is transforming at a faster pace with the advent of digital, making it "impossible to predict the future".
When asked if the body will come out with a number mid-way through the year like last fiscal, Ghosh denied such a possibility, saying there is a need to look at the industry with a "new lens" and gave a broad colour of what to expect.
"At best, we are cautiously optimistic about the year....it is a year of challenges and transformation," she said, pointing out the difficulties that await the sector.
She enlisted the future of Brexit, the trade wars between China and the US, Amercian policies with regards to Indian IT professionals' working there such as the visa curbs, regulations on the technology front as the key issues.
Ghosh said the industry has to work hard with governments and other regulators as it is impacted largely by public policymaking.
The Nasscom CEO survey finds that 44 percent of those polled less confident of the global economy, which is lower than 2018, but a majority of them are more optimistic about technology spends.
The body, however, did not divulge any details on the sentiment by size of companies, which may give a better understanding of how the industry will shape up.
In FY19, the country's IT software exports grew 9.2 percent to $137 billion, while the domestic revenue grew 7.9 percent to $44 billion, the body said.
The body said 1.7 lakh new jobs were created in FY19 by the industry, while 6 lakh employees were re-skilled for the future. Nasscom said the shortage of talent is a key challenge and singled out re-skilling as an imperative in FY20 for the industry.
Indian IT sector to reduce college hiring by 40%, will prioritise last year’s offers first
The Indian IT sector is in a very bad shape, because of which the industry had to lay off employees in the thousands. This year, the Indian IT sector will be cutting down hiring through colleges placements by at least 40%. Industry giants will be prioritising placing recruits hired last year.
Why has Wipro's Rishad Premji taken a 50 per cent pay cut
Rishad Premji voluntarily reduced his salary by 50 per cent for the fiscal year which ended in March 2023 in the wake of the company's poor net performance. He earned Rs 7.87 crore in total annual income, about 50 per cent ($867,669 or Rs 7.18 crore) less than he did the year before