Nasscom says no cut in FY17 growth target of 10-12%

R Chandrashekhar, Nasscom President said there is no reduction in demand for IT services

Even as some large Indian IT companies have posted lower-than-expected June quarter numbers and issued muted sales outlook, Nasscom on Wednesday said it sees no reason to cut industry's full year growth forecast of 10-12%.

Nasscom President R Chandrashekhar told PTI that from an industry standpoint, the growth continues to be uniformly distributed and there is no reduction in demand for IT services.

"Nasscom does not see any reason to change the industry's annual forecast. Currently, the growth is quite uniformly spread between verticals, geographies, service lines...We are seeing well-distributed growth... Also, the feedback from companies, as of now, is that they do not see any diminishing demand. So, there is no reduction in demand (for IT services)," he said.

Chandrashekhar's comments come at a time when the two large IT companies Infosys and Wipro have disappointed the street with muted Q1 numbers.

Wipro, on Tuesday, missed street expectations with over 6% fall in net profit for the first quarter ended June and forecast that IT services sales would grow less than 1% during July-September.

The company, which announced the disappointing set of numbers after markets hours yesterday, expects revenue from IT services to be $1,931-1,950 million for the September quarter, that is flat to 1% sequential growth.

Last week, Wipro's larger rival Infosys had slashed its annual sales forecast, sending the stock crashing the most on a single day since Vishal Sikka became CEO more than two years ago.

Infosys, which does not give quarterly outlook, had lowered its dollar guidance for the full fiscal to 10-11.5% from 11.8-13.8% (projected in April) due to currency volatility and headwinds.

Infosys had also said that it was facing unanticipated headwinds in discretionary spending in consulting services and package implementations as well as slower project ramp-ups in large deals.

In February this year, Nasscom set a target of 10-12% growth in IT-BPO exports for the year 2016-17. The industry is estimated to have clocked 12.3% growth in the 2015-16.

Chandrashekhar today said that Nasscom projects the growth for IT industry as a whole and not of few large Indian companies.

"Our full year growth forecast (10-12%) is to do with the industry which includes large and small companies, Indian companies and MNCs, start-ups...Everyone...We will not draw inference from one quarter or one segment," he said.

Chandrashekhar admitted that while there was a pressure on margins of companies, the industry is seeing a "fairly robust well spread out growth in revenue".

"Despite the economic turbulence in the world, there is a fairly strong demand profile (for IT). Also, investment in IT is not coming down," he said, adding that the share of Indian IT in global sourcing "is increasing, not decreasing".

It may be recalled that amongst the top three Indian IT players, TCS is the only one that posted stellar Q1 numbers. India's largest software services firm TCS reported 9.9% rise in consolidated net profit, while its revenue jumped 14.2% year on year.

TCS had attributed its June quarter numbers to strong execution and accelerating customer adoption of cloud, big data and analytics.