"The Indian IT services sector is likely to resume high single-digit revenue growth in 2021-2022 on higher demand for digital transformation," it said.
Fitch added that it expected the Indian industry to continue to take advantage of its low-cost operations and maintain its strong foothold in the global IT landscape.
"The industry will continue to remain export-driven as it mainly serves US and Europe-based clients. We forecast the industry's revenue to rise by a high single-digit percentage during 2021-2022, after a relatively flat year in 2020," it said.
The industry has seen an average growth rate of about 8 per cent during 2014-2019, it said. The impact from the US ban on new H1B and L1B visa applications is "manageable", it said.
Profitability -- as measured by Earnings Before Interest Tax Depreciation and Amortisation or EBITDA margins -- is likely to remain stable, Fitch report said and added that strong demand for the services, Indian rupee depreciation and cost-control measures, such as salary freezes during downturns, support the stable profitability.
"Shareholder returns that are higher than our expectations are a key risk to the Indian IT services companies' ratings," it said.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
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