IT cos set to benefit from demand rise: Crisil

Credit profiles of the domestic IT service providers have survived the economic downturn and they are well positioned to benefit from the gradual improvement in demand, leading rating agency Crisil said today.

The IT service providers have strong long-term prospects as key markets (the US and Europe) show signs of economic revival, Crisil said.

The domestic IT service providers have successfully weathered the turbulence in the global economic environment since the second half of FY09. This is reflected in the relative stability of the credit profiles of these players in this period, the report said.

"Crisil-rated Indian IT service providers have responded to a challenging business environment by enhancing operational efficiency, diversifying their business profiles, enhancing risk management practices, and maintaining strong liquidity," Crisil Ratings director Pawan Agrawal said, while releasing the report here today.

IT service providers have focused on increasing the proportion of fixed-price contracts, changing effort mix in favour of off-shore operations over on-site, and improving manpower utilisation, the report added.

IT players have also begun to increasingly focus on high-end services such as infrastructure management and enterprise applications, which have higher margins than traditional low-end application development and maintenance services, it said.