For IT stocks, from a demand perspective, there is room for a lot of upside. Anantha Narayan of Credit Suisse sees the sector growing at 15-20 percent, going forward. But, Nasscom's Som Mittal is not convinced enough to up full -year guidance from 12-14 percent.
For IT companies, as per the last quarter numbers, the pickup has been across the board - both big and small companies - and that typically happens when the environment is turning to be a lot more positive for the sector, says Anantha Narayan, Director of Indian Equity Research, Credit Suisse. From a demand perspective, there is room for a lot of upside, he adds.
He sees the Indian IT sector growing at 15-20 percent, going forward.
However, Som Mittal, President, Nasscom, thinks it is too early to say if full-year guidance of 12-14 percent will be upped. He sees an uptick in demand from both the US and Europe.
On the Immigration Bill, he is not sure how fast it will move. It appears that the bill has been put on the back burner, he adds.
Below is the verbatim transcript of Anantha Narayan and Som Mittal's interview on CNBC-TV18
Q: There has been a genuine pickup in the US growth data, the US jobs data in the past five-six months, how much of an upside kicker do you think it can provide to some of the tier I IT companies?
Narayan: From a demand perspective, clearly there is room for a lot of upside and we have seen this in previous cycles. When the recovery happens it can take people by surprise. To us there were a couple of encouraging data points recently, first is when you look at the last quarter numbers the pickup has been across the board both big and small companies and that typically happens when the environment is turning to be a lot more positive for the sector.
Second is the two biggest segments that contribute to the sector are the US geography and the financial services industry and both these segments have seen some pretty strong growth in recent quarters. I think this is the beginning of a pickup and we could potentially get to an environment where growth rates of 15-20 percent will not be improbable.
Q: What is your sense, do you think after looking at what TCS had to tell last week to analysts as well the recent data from the US, Nasscom may perhaps find the risk to the upside for its forecast?
Mittal: It is too early to say whether we should change our forecast but I agree that the markets are looking good, I think there is recovery in the US and it is also been driven by the fact that technology is the center of all transformation and most corporations are going through this transformation.
We must also not ignore Europe at this time because Europe which typically outsources more had not moved towards the offshore at the same level but given that they have their own cost pressures we are seeing uptake also in Europe and this is besides UK which always was strong but I think in the Nordic areas, Scandinavian areas, also the Germanic space we are seeing this increase.
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