Jan 11, 2010|
Indian IT: What does 2010 have in store?
The year 2010 promises unseen challenges and new opportunities for companies and investors. It is expected to be a year of significant changes in the business landscape around the globe. Well, a lot changed for Indian IT in 2009 as well. Which other sector can vouch for that than Indian IT, which started the year with very weak visibility and closed with a much clearer picture.
In this article, we will discuss what lies in 2010 for the Indian IT sector.
To start with, the Indian IT sector which saw a tough time till mid-2009, made a decent come back during the second half of the year. It is now seeing a pickup up in global demand and stability in billing rates that had instead nosedived in 2009 on account of the economic crisis.
However, 2010 appears to be better. Global IT spending is expected to increase by 3.3% during this year after witnessing a 3.6% decline in 2009. IT services spending in particular are expected to rebound by a decent 4.5% to reach US$ 816 bn in revenues by the end of 2010. This growth will bode well for the Indian IT industry as well. In fact, the industry regulator - Nasscom - also sees an uptick in IT demand and expects the industry to register a double-digit growth during the coming fiscal - FY11.
Well, last year's downturn was not that bad for the Indian IT industry. It echoed the benefits that businesses can derive by outsourcing non-core activities to efficient best in class IT vendors. As we move into 2010, we see more MNCs hiving off their captive IT units and shifting towards third-party outsourcing as an alternative.
We also see increased vendor consolidation wherein client companies will source end-to-end IT services from fewer numbers of tested vendors. This makes the case stronger for Indian IT biggies. We expect them to win more repeat business from their existing clients during the coming quarters. Though no one claims that Indian IT will achieve the pre-downturn levels of 30% YoY growth in some time to come, it has a strong chance to grow at an average rate of 15-20% for the next 5-10 years. An impressive rate to grow at, we believe!
Another defining theme for Indian IT during 2010 is expected to be a greater shift towards higher end services. We also see the IT majors renewing their focus towards emerging economies like India and China in terms of future growth potential.
Now, while there are good chances that these positive expectations get converted to reality in 2010, whether the overall benefits will trickle down to stock prices of IT companies remains somewhat questionable. High base valuations and an appreciating rupee are the near term concerns that investors in IT stocks must have to live with. In such a scenario, it seems prudent for investors to rationalise their mid-term expectations from the sector.
More Views on News
Jun 10, 2017
Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.
Aug 17, 2017
PersonalFN simplifies the mutual fund account statement for you.
Aug 17, 2017
A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.
Aug 17, 2017
Mr Trump is in the White House and the gods are in their heavens; what's not to like?
Aug 16, 2017
All across the country, the old gods become devils. New, gluten-free gods take their places...
More Views on News
Aug 7, 2017
The data tells us quite a different story from the one the government is trying to project.
Aug 10, 2017
Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.
Aug 8, 2017
Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 7, 2017
Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407