Feb 16, 2017 09:41 PM IST | Source: Moneycontrol.com

Slowdown in IT? Don't fret, say Mukesh Ambani and TCS' Chandra

While RIL Chairman Mukesh Ambani said the US' protectionist policies could be a blessing disguise for Indian IT, Chandrasekaran said he was not in the 'doom and gloom club'.

Slowdown in IT? Don't fret, say Mukesh Ambani and TCS' Chandra

Nilesh Pinto
Moneycontrol

Sentiment over the IT sector has been pensive in recent weeks following the advent of a protectionist administration in its biggest market, a muted growth environment and the struggle to innovate and adapt to automation.

On Wednesday, software industry body NASSCOM took the unprecedented step of deferring guidance for the next financial year by a quarter, citing the high rate of change in the sector and said it needed to have “deeper interactions” with customers and stakeholders.

It also conceded that the sector would grow at the lower end of its target in the current fiscal, having already revised its revenue growth target to 8-10 percent from 10-12 percent earlier.

With many IT companies accumulating a lot of free cash and apparently struggling to make use of it in a challenging environment, investors have started pressuring these firms to return cash to shareholders. 

While the slowdown may well be real, recent comments from two industry bigwigs appear to suggest that the dark cloud may actually have a silver streak.

The biggest concern for tech companies has been the proposed curbs on H1B visas used by highly skilled foreign workers. Indian IT firms are highly dependent on these visas for their employees.

A bill in US House of Representatives proposes to more than double the minimum wage for these workers, a move which would significantly increase finance costs for India’s tech firms.

But N Chandrasekaran, the outgoing chief of Tata Consultancy Services – India’s largest software company – quashed concerns over possible US visa troubles and expressed confidence that the demand in the IT sector would be robust.

Also read: EXCLUSIVE: Here's why N Chandrasekaran is bullish about TCS and IT sector

“I am not in the doom and gloom club,” he told CNBC-TV18 in an exclusive interview, adding that the key would be providing customers with right offerings and solutions.

He said the current situation of the market was good and it would be hypothetical to quantify the impact of the new US visa policy until it comes into effect.

“It will never be an easy surface to bat on. But one cannot say it’s a difficult pitch and we won’t play,” Chandrasekaran said.

Also read: NASSCOM Summit: Mukesh Ambani says Trump may be blessing in disguise for IT cos

Reliance Industries Chairman Mukesh Ambani took the optimism one step further.

He told a NASSCOM summit on Wednesday that Trump’s protectionism might actually be a blessing in disguise for the sector. Saying that data is the ‘new oil’, Ambani said: “It [US protectionism] will force the Indian IT industry to focus on solving problems in India,” Ambani said. “We now have the infrastructure to make India one of the biggest software markets in the world.”

Despite deferring the guidance, NASSCOM Chairman CP Gurnani, too, insisted that the sector is still a “growth industry” and has a “good future”.

(Disclosure: RIL, which owns Reliance Jio, also owns Network18 and moneycontrol.com).

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