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Dec 12, 2012, 02.13 PM IST | Source: CNBC-TV18

IT companies brace for tough December

Top IT companies are bracing up for a tough December. TCS' chief executive officer N Chandrasekaran and Infosys' managing director and chief executive officer SD Shibulal are expecting business to slowdown this month.

After hints of a weaker-than-expected CY13 by Cognizant and a possibility of Infosys missing its October-December guidance, India's No. 1 tech major TCS too agrees December may see a seasonal dip in volumes. CNBC-TV18’s Shreya Roy and Kritika Saxena report.

December is not really festive for the IT sector. With significantly lesser number of working days in the month, volumes see an immediate hit for tech companies. That's one of the reasons why Infosys has hinted to analysts that it may miss its revenue guidance for the quarter.

SD Shibulal, managing director and chief executive officer, Infosys says as the quarter progressed, the company saw some challenges. "Those challenges include large deal closure delays. So, some challenges have emerged after October 15. Some of them will impact the guidance. But we still have four months to go. If the business velocity picks up and we close some of the large deals, it will address some of the challenges," he asserts.

Also read: Infosys FY13 revenue outlook under threat, says UBS

While India's largest IT company TCS does not give guidance, it agrees that the Oct-Dec quarter may see an impact on volumes

N Chandrasekaran, chief executive officer, TCS feels that FY14 is going to be a better year. "December quarter always has furloughs. That results in lesser growth in the quarter and volumes suffer. That's all we have said before. I would like to stick to that," he adds.

So, what are the problem areas?

Chandrasekaran says, "Usually manufacturing companies and hi tech companies and telecom companies have furloughs in December. This year also we are seeing furloughs. That will have an impact. Overall, we are not seeing any signs of change for next year, but we will give more colour in January."

Just last month, NASSCOM had revised its growth projection for FY13 from 11-14 percent to 11 percent. But for now, that's on track.

Clients are currently in the process of deciding their budget for CY13. Till that is finalised, it will be difficult for NASSCOM to predict the outlook or how the budgets for the calendar year 2013 would be.

However, NASSCOM also maintains that the Oct-Dec will be tepid and volumes could suffer. All in all, it will be able to touch the double digit mark by the end of the fiscal, and will be able to mitigate the pressure seen in December in the Jan-March quarter.

Don't miss: No acquisition plans in China; positive on Europe ops, says TCS

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