IT sector to see 5-8% sequential growth in 2010: iGate

25365 Investors following Tech Mahindra. Share this News with them.

0

Like this story, share it with millions of investors on M3

IT sector to see 5-8% sequential growth in 2010: iGate

I-Gate founder and CEO Phaneesh Murthy is optimistic about IT sector's growth. Speaking to CNBC-TV18, Murthy said IT companies can expect 5-8% sequential growth in the first three quarters of 2010.

Post your opinion here

 

0

Tweet

Share on Tumblr

Excerpts from Business Lunch on CNBC-TV18 Watch the full show » ALSO READ See latest News about Tech Mahindra See previous management interviews See what other Experts & Brokerages are saying about Tech Mahindra

There has been small uptick in the income tax (I-T) rate, which IT companies will have to pay next year because of the Software Technology Parks of India (STPI) clarification. However, I-Gate founder and CEO Phaneesh Murthy is optimistic about IT sector's growth. Speaking to CNBC-TV18, Murthy said IT companies can expect 5-8% sequential growth in the first three quarters of 2010. He is comfortable with the current pricing level, which he felt would protect margins.

Speaking about the US, Murthy said the country is unlikely to see a double-dip as spending revival was broad-based. He also felt employment level should start picking up in the US.

However, he is spectical about Europe's growth in 2010.

Below is a verbatim transcript of an exclusive interview with Phaneesh Murthy on CNBC-TV18. Also watch the accompanying video.

Q: What is your sense-are things alright or any sign of trouble with volume growth for the IT sector?

A: I actually think we are coming out of the recession at what I would call a scorching pace. There are four-five trends which are happening and because of that the base is been set very high; the first is the rebound in financial services, the second is broad base increase in IT spending, the third is the fact that there is significant pent-up demand which has been there for the last 15-18 months because nobody has got what they wanted. The fourth of course is the fact that because of the concerns, which now are probably going away about the double dip recovery, nobody wanted to do any employment. Consequently, outsourcing was the answer and we started seeing the benefits of that, most companies grew 5-7% last quarter.

I anticipate that for the first two-three calendar quarters of 2010 also we will probably see even more accelerated growth rate on a quarter-on-quarter basis. I think I had talked about a 15-17% increase in 2010 over the previous year in terms of the growth of the industry. I probably will want to revise that upwards of 20% now. So I think overall quite positive news for the industry.

Q: When you talk about huge improvement in sequential growth for companies as well, how much of an uptick do you think they can set themselves on to for the rest of this year?

A: I think the sequential growth in my sense it will be probably about 5-8% for at least the first three quarters. After the first three quarters what I anticipate is that either the double dip recession will come in, in which case spending will go down and I do not think that that scenario will actually happen. But because the market will stabilize, employment will start picking up and therefore the pace may come down but for the first two-three quarters definitely we are seeing clear signs of more than 5-7% growth happening on a sequential basis.

Q: Any improvements in pricing that are likely with the kind of volume growth that you are talking about?

A: I think the market has kind of stabilised now quite a bit and because of the stability in the market while I am not necessarily saying that pricing power is there and so on. I think pricing is at a much more comfortable level. We seem to get for the right solutions, the right kind of prices which will protect good margins so, I think 2010 would be a year where you would see pricing compared to 2009, which was a disaster year anyway mildly positive.