IT Firms Struggle with Rising Input Costs & Demand Slowdown

Infosys, India's second-largest software exporter expects to grow by only 8-10 percent in the year to March 2013, after growing at around 16 percent in 2011-12. This is much lower than the 11-14 percent growth forecast by the National Association of Software & Services Companies (Nasscom)

Motilal Oswal, Mumbai-based brokerage said the guidance by large IT firms challenges Nasscom's growth expectations in the year ahead. Analyst Ashish Chopra of Motilal Oswal stated in his latest report on the IT sector, "While TCS will grow above the industry, we doubt if the industry growth number will still be 11-14 percent, going by the developments during the quarter." He further added, "We would not be surprised if Nasscom's estimates for fiscal 2013 are revised downwards."

Nasscom has maintained that it expects to revisit the forecast only in October, as it said while coming out with the initial forecast earlier this year. N Chandrasekaran, the new Chairperson of Nasscom said, "For this year, we are sticking to the forecast of 11-14 percent. October will be the time that we will come up for a review. It's not prudent to change the forecast based on a quarter's performance of IT companies."