Despite uncertainties stemming of US President Donald Trump's visa policies. IT industry body NASSCOMM is confident of a strong demand for the sector.
The demand scenario for the IT sector looks robust going ahead, NASSCOM President R Chandrashekhar told CNBC-TV. There are, however, uncertainties coming from Trump's protectionist measures and clients of Indian IT companies freezing IT spends, he said.
Nothing can be said on the H1-B visa reform as of yet, because new US administration has only taken reigns recently and it is yet to unfold, he said.
NASSCOM has delayed its guidance for the first time, as it needed more time to speak to clients of Indian IT companies from across the world to quantify the impact of global factors on the IT industry, said Chandrashekhar. It had issued a revised guidance in November 2016.
"While there are some uncertainties in the short term, the initial data from global analysts on tech spending in 2018 is promising, We are initiating deeper interactions with all stakeholders – global customers and industry providers – to get a more reliable and clear perspective on the projections for FY2018 and will give the guidance in the next quarter,” Chandrashekhar said in a statement.
Below is the verbatim transcript of R Chandrasekhar's interview to Kritika Saxena on CNBC-TV18.
Q: The fact of the matter is that this is the first time that NASSCOM has not given a guidance for the coming year. Can you take me point-to-point through the factors that have led to this? What are the uncertainties that are there right now which haven't been prevalent in the last five years' timeframe?
A: First and foremost, this was also the first year in which we had issued a revised guidance as recently as November. What we see now is that going forward on one hand the demand scenario is quite robust, all the projections by global analyst indicate that the demand is going up for IT services, for the product area, for the business process management (BPM) area and these are the areas which the Indian industry has been major contributors into. The second thing is that as the demand is rising, at the same time, there are factors which make it difficult to quantify the impact of the rise in the prospects.
Q: For instance take me through the factors, one is of course the Trump administration executive orders that have come in, proposed increased visa cost, is it because you haven't been able to foresee the exact impact on one of the largest economies that contribute to the Indian IT industry is that a significant factor for this?
A: I think we have to bear in mind that the actual situation as far as the new administration in the US is concerned is still yet to unfold, these are still very early days. The impact of that in terms of the companies in the US, the client companies in terms of freezing their spending in the IT, especially the discretionary part of it, has become a little uncertain.
So, while the prognosis is positive, the quantification of that is certainly a little uncertain because of these factors. So, when we are trying to quantify the impact of that, we need to talk to our stakeholders both from the supplier side which is on the provider side that is the companies which are here in India as well as with some of the clients companies across the world.
Q: The fact of the matter is, yes it is on pause, yes may be in a quarter there should be some more clarity, but have you been able to estimate what the impact would be of the proposed visa norms, of the visa increases, 2.5-3 percent hit on margins is what the industry is expecting?
A: I think we should bear in mind that visas is only one part of the equation it is not be all and the end all, it is a small part of it. The total number of new visas taken by the Indian IT companies is only around 15,000 to 20,000 in that range. Whereas the total number of people who are employed in the industry is approximately 4 million. That should give you a sense of proportion as to the importance of that issue on the overall industry performance. Having said that I think that the uncertainties and the challenges which lie in the quantification not in estimating the direction of change.