According to brokerage Prabhudas Lilladher, growth in technology spending atn BFSI clients in the US and Europe may be muted in 2019-20. This would be due to trade war concerns, uncertainty in central bank policy and Brexit-related developments.
“Accenture bookings and ISG contracting data also indicated weakness in deals,” the report stated.
Some are optimistic that top-tier domestic IT firms
will stick to their earlier revenue forecasts for the year. “Pockets of weak BFSI may drive marginal but not meaningful deceleration for Indian IT players. However, it is margins that pose a risk to earnings growth this fiscal and the first quarter of FY20 may reflect some moderation in this regard,” Motilal Oswal said in a research note. For this financial year, market leader Tata Consultancy Services (TCS) is confident of double-digit revenue growth. Infosys has said it expects one of 7.5-9.5 per cent and HCL Technologies of 14-16 per cent.
“Even as the demand environment is reasonable for offshore pure-plays (IT services firms), we expect rough edges to performance of companies
with volatile financial services and uncertain manufacturing, especially for those that have high exposure to the automobile segment,” Kotak Institutional Equities said in a note.
“Though broader demand is still reasonable, a slowing market is also a reality.”