European crisis not to hit Indian IT, says Nasscom

Sovereign debt crisis in some European countries and slow recovery in the US will not impact the Indian IT industry this fiscal, software industry body Nasscom. 

"We do not see the Indian IT industry getting impacted by the sovereign debt crisis in Europe or slow recovery in the US as clients in these geographies will continue to spend on IT services to run their businesses cost-effectively," Nasscom president Som Mittal told reporters here. 

Hoping that the concerted efforts of theEuropean Union to ensure Euro remained stable would bear fruit, Mittal said revenue from export of software services would grow 16-18 percent this fiscal (2011-12), as per Nasscom's earlier forecast. 

"As our industry's exposure to the debt-ridden countries like Greece, Italy and Spain is limited, the risk in case of defaults by their governments will be minimal, as outsourcing of IT services would continue," Mittal said on the margins of a Nasscom event. 

Nasscom projected that revenue from software services exports will be about $71 billion in fiscal 2012 as against $60 billion in last fiscal (FY 2011) when exports grew 15 percent. 

Admitting that uncertainty would remain so long as the European debt crisis and jobless growth in the US persisted, Mittal said the Indian IT industry was not unduly concerned as discretionary spending by clients for transformational process and migration to cloud computing were taking place. 

"Our companies do important work for global customers, like running their IT operations. Discretionary work is also happening in transformational area, mobile applications and cloud computing," he said. 

Noting that the first two quarters (April-September) have been relatively good, Mittal said there was no indication from clients that they were holding up decision-making or delaying spending. 

"We are sticking to our growth forecast of 16-18 percent for this fiscal. IT budgets for calendar year 2012 will be known by December or in January when we will have a better understanding how the industry will span out in next fiscal (2012-13)," the former HP India president said. 

Clarifying that the present crisis arising out of limited government spending due to debt burden was different from the 2008-09 crisis resulting in tech meltdown, Mittal said despite uncertainty, the sentiment remained positive. 

Referring to the gradual weakening of the rupee against the dollar, increasing export revenue, Mittal said though the industry will benefit in export realisation, it would prefer currency fluctuation in a narrow band, than being volatile.