Analysts at JP Morgan believe IT services firms have not seen direct impact of the virus so far, but risks to “business-as-usual” delivery of said services are increasing as virus infection spreads to more countries.
"Various enterprise clients are increasingly restricting or might restrict domestic travel. Assuming the virus impact continues to spread, we believe clients could increasingly have consultants work from home, but could also cut/delay deployment of new consultants," the brokerage firm said in IT and BPO services sector update.
The brokerage firm further said, uncertainty and potential disruption from COVID-19 could lead clients to delay decision making and push back new project starts and outsourcing initiatives. Moreover, potential travel restrictions could delay new project awards wherever final outsourcing decision is contingent upon travel.
"Many client industries are going to incur lower earnings in C1H or this year, due to direct impact to their businesses (e.g. various travel clients have cut expectations). We believe IT buyers could respond to lower earnings (or revenue) by cutting discretionary IT services projects, which could hurt 2Q/3Q growth rates across various firms," it added.
At 09:54 am, TCS
erased its early morning losses partially and was trading 1 per cent lower at Rs 1,954 on the NSE.
The company announced that its board has declared an interim dividend of Rs 12 per equity share. The interim dividend shall be paid on Tuesday, March 24, 2020 to the equity shareholders of the company. It has fixed March 20, 2020 as the record date for the purpose.