IT services may grow in 8-10% range in FY17: Survey

Global economic crisis and technology shifts to curtail sector from reaching Nasscom's target of 12-14%, says the survey by Offshore Insights

Growth for India's IT services sector over the last few years have been coming down due to global economic crisis and technology shifts and FY17 may not be any different.  

According to analyst and research firm, Offshore Insights, projected growth for FY2016-17 will be in the range of 8-10%. The firm also predicts that the growth for FY16 is expected at around 10-11%, much lower than Nasscom's prediction of 12-14%.

"Because of higher spend (percentage increase) by clients on Cloud, SaaS, ready apps and platform based services/business service provisioning etc (not in traditional maintenance, outsourcing, support, Infra services), Indian export may see limited growth as most players are still evolving on these areas," said Sudin Apte, CEO and research director, Offshore Insights.

The survey conducted across 408 global IT decision makers stated that the budgets for CY2016 have been impacted by the shadow of economic challenges, close to 56% of the respondents said that the road ahead has challenges.

“Other than the global economic crisis, growing protectionism among nation countries is making trade difficult. The good news is that tech spend is expected to grow by 2.1-2.2%, but the spends is shifting to new technology," said Apte.

The survey also found that an overwhelming majority of firms claim that digital is mainstream. Global 2000 firms will spend 15-16% of their IT services/outsourcing spends on SMAC. India will export $15 billion worth of digital software and services around it in FY2018-19.

Though spends are increasing the survey found that the overall share of offshoring is not increasing. Percentage of work going offshore has remained the same at 23.5%.

Apte also added that Indian players need to be ready for another year of low-pace growth and also realise that digital hype will deliver limited growth as deal sizes are still small.