Despite Infy's poor show, Nasscom's 11-14% growth forecast for IT remains

Despite Infosys's growth guidance of 8-10 percent for the 2013 fiscal year coming in much lower than the Nasscom's guidance of 11-14 percent earlier, Nasscom maintains that their guidance is very much achievable.

Nasscom president Som Mittal told CNBC TV 18 in an interview that Nasscom, in its yearly guidance had already stated that there could be differentiated growth among IT companies as they look at different growth strategies.

Infosys announced its fourth quarter results yesterday and with a poor guidance for the next year, the stock tanked almost 13 percent by the day end. The company said that IT budget spends could be low and the company would not even give salary hikes for this year.

 Despite Infys poor show, Nasscoms 11-14% growth forecast for IT remains

Reuters

Mittal admitted that there will be uncertainty in 2013 as many analysts have also warned that IT budget spend will decline. But all these concerns were already factored into the growth estimates of Nasscom and there was not much that has changed since then.

Mittal said, "In fact, the job situation in the US is getting better. People are adapting to changes and taking on new business models to cope with the situation, like getting into cloud computing. So the guidance of 11-14 percent growth should remain. There is no reason to change that."

He said that recovery is crucial and many companies are even trying to get into the emerging market with their new products and services.

Though Nasscom does not speak individually about companies, Mittal said, listening to some issues that Infosys mentioned, the slow growth could be company specific in nature.

Infosys had mentioned that its operating margins in the first quarter of 2013 could go down by 20 bps (1 percent= 100 bps) because of high visa costs. Nasscom has been trying to bring down the visa costs by addressing the issue with the US government but not much progress is has been seen yet.

Mittal said that visa costs went up two years back and are already priced in now. What is of greater concern in higher rejection rate of visas which adds to the uncertainty of businesses. This is of top priority for Nasscom and the Indian government. The US government is also realising the situation and they might address the issue in the coming months by giving a guidance on how the rejection rates should come down.

Updated Date: Dec 20, 2014 17:24:17 IST