IT cos under pressure due to eco unrest Nasscom

The Dollar Business Bureau

IT companies’ margins are under stress because of various reasons such as worldwide economic turbulence, whereas there may be a slight drop in hiring due to enhanced automation and efficiency, industry association Nasscom said.

“Companies are relatively optimistic about the returns and prospects, despite headwinds in several places for varied reasons. But obviously, there has been a considerable pressure on the margins. That is far more visible and tangible compared to the overall trajectory of revenue,” R Chandrasekhar, President, Nasscom told journalists on the sidelines of an event on Wednesday.

"Globally, there has been economic turbulence. Europe had very low level of growth, particularly in southern Europe there has been very low or negative growth...Overall in Europe, the growth is very little," Chandrasekhar said.

He further said that the IT firms, which have signed deals in pounds, may witness some pressure on margins because of a decline in the currency after the UK’s exit vote (Brexit) from the European Union.

There may be a marginal drop in the hiring activity by IT firms due to enhanced levels of automation and efficiency, he added.
“There is no dramatic turnaround in the hiring activity. But we are witnessing a slight decline for various reasons. Automation within the IT sector is one of the reasons,” he said.

According to Chandrasekhar, IT and ITeS industry employed three million people when it touched $100 billion mark and it is expected that the industry would need around 1.5 million people for another $100 billion.