We face the greatest medical-cum-economic crisis in history. Admit it or not, the coronavirus has already created a deep global recession.
With the business of most of its clients getting impacted by the coronavirus outbreak, growth for India’s IT services sector is going to be a big challenge in the coming fiscal, an industry veteran said.
There will be an impact on the Indian Information Technology industry for multiple reasons, former Chief Financial Officer of Infosys Ltd V Balakrishnan said. With the restriction on movement of people following the scare, Indian IT companies’ ability to deliver services on-site could get severely impacted but that could be addressed to some extent by working remotely, he added.
According to him, most of the clients of the industry– airline, retail, oil and gas, and financial services are getting impacted following the coronavirus outbreak. So, it will have a drastic impact on discretionary spending and some of the digital spending.
“Of course, it will happen with a lag, maybe one quarter. Probably we can see its full impact next year.” He said revenue growth for the Indian IT industry would get severely impacted.
The bank has revealed that it has lost 10% of its deposits since peer Yes Bank went belly up earlier this year. It also has exposure to vulnerable sectors in the wake of the lockdown to check the spread of COVID-19.
There will be a tsunami of job losses for employees who don’t have a regular salary, people without a written contract. A labour market crunch right now can easily turn into a nightmare.
India’s economy is set to slow down sharply as companies face the prospect of going weeks or even months with virtually no revenue and consumer demand likely to remain soft even after the coronavirus crisis blows over because of bankruptcies, job losses, and the resulting psychological scars.
According to V Balakrishnan, global markets such as the US, Europe, and Japan are already witnessing a significant slowdown in economic growth. Next year, the growth of the Indian IT services industry is really going to be a big challenge. It’s (now) exactly like 2008 when everything got shut down over a period of time.
Forecasters are slashing India’s economic growth estimates for the financial year starting 1 April, with most expecting a severe contraction in June quarter output.
Let’s wait and watch and hope for the best…