Expect IT sector growth at 10-14% for FY14: Zensar

Despite the approval of US Immigration Bill and the ongoing slowdown, Ganesh Natarajan, Vice Chairman & CEO at Zensar Technologies believes the environment for the IT sector is stable.

He does not see any problems in markets like America, Europe and UK and is therefore, optimistic about FY14 prospects. For FY14, he predicts IT sector's growth at 10-14 percent on constant currency basis. NASSCOM has projected the sector's growth at 12-14 percent.

Also Read: Earnings reset likely for Infosys: Cowen & Co
Speaking to CNBC-TV18 on the order book of the company, Natarajan says the order book of the company is very robust. "We are still sitting on a USD 120 million order pipeline, some very big deals in place," he adds.

Below is the verbatim transcript of Ganesh Natarajan's interview on CNBC-TV18

Q: We saw some weak earnings from Oracle and Accenture lowered its guidance just from what they had set out in the month of March, plus on Monday one of the brokerage reports cited the possibility of Infosys as well lowering the guidance. Has business weakened a bit in light of the Immigration Bill and the noises there? How will FY14 shape up?
A: You are connecting it to unrelated issues, because we will only see the impact of Immigration Bill after four to six months period when the reconciliation happens. At this point of time business is stable. I would not say it is phenomenal environment, because there are concerns that every company has about the economy and especially if your clients are in the capital equipments manufacturing space, so you do see those constraints.
But broadly, the business environment is fairly stable at this point of time. In markets like America, Europe and UK we do not see any problems and so, I would be fairly sanguine about prospects for FY14. Beyond that, the double whammy of Immigration Bill plus continuing slowdown in the economy will be difficult to predict, but I would be very surprised if Indian industry does not grow 10-14 percent this year constant currency. Q: The results for Oracle and Accenture are pointing out to softness. The sales of new software licenses, cloud subscriptions are usually seen as good indicators of future business that came in lower than expected. Is reality a little less cheerful than it was a quarter ago or six months back?
A: Yes, it is less cheerful due to enough opportunities. People like us are primarily focusing on manufacturing, manufacturing and insurance. If you are not only able to provide the same service that you have always done like the application development support, in addition if you are able to hold your customers' hand and take them into the new areas, mobility, social media, cloud, so if you have enough capability in the existing domain and can build the future domain I do not think there is anything to worry about.
_PAGEBREAK_ Q: National Association of Software and Services Companies (NASSCOM) said 12-14 percent. Would you say that you have to revise it to 10-12 percent or something like that?
A: No, I would not say that. NASSCOM's projection of 12-14 percent is still very doable. If you have an Accenture or an International Business Machines (IBM) and you have a large stake in the existing model, the transition will be a little traumatic. For smaller companies, we will be able to balance the existing portfolio and the future portfolios much better. So, I would still stick with NASSCOM's 12-14 percent at this point of time, no data point to show that it should be reduced. Q: You have been winning multi-million dollar orders, some new clients as well. What has been the order win in the last three months at the start of the new financial year and where does the order book currently stand?
A: The order book is very robust at this point of time. In terms of outlook, we are still sitting on a USD 120 million order pipeline, some very big deals in place. That is why I said both the order signing as well as the additions to the order book in all our areas - if you look at the Enterprise Resource Planning (ERP) area, the application, support, maintenance and development area and infrastructure management, right now we are sitting pretty in most markets and across all the verticals. Q: Are you close to finalising and winning any big deals?
A: We are looking at two or three good opportunities that will hopefully close over the next four to six weeks. Only Monday, we did a review of our sales. The pipeline looks robust at this point of time. Q: You did about 18 percent growth in FY13. Is FY14 going to be better, perhaps a 20 percent growth roughly or thereabouts?
A: I will be cheating, because the rupee seems to be helping all of us. From that point of view, but even in terms of constant currency we would certainly want to meet or exceed the NASSCOM guidance. Q: If the Immigration Bill has passed the way it has been passed in one house, how does life change? Does it takeaway a good 3-4 percentage points from growth?
A: If you look at the way it is passed in the senate, there are three issues. One, the cost of visas will go up irrespective of what bill gets passed. Secondly, the outplacement clause, the House of Representatives will not consider the outplacement clause. That would be draconian in the sense that you cannot really place people on customers, then why would you send them in the first place. Third is 50-50 and is writing on the wall.
At some point of time, all of us will have to do much more local recruiting. If you take my own company out of close to 850 people in America, we are over 50 percent in terms of the US citizens. So, we will have to balance those portfolios. I do not believe that the bill will pass as it is today, which means that we will get a version when it finally comes into law.