Even as various industries are going through a rough phase and the future remains uncertain too, the IT industry is expected to benefit from the rising inclination of firms towards deploying digital technology. The Indian information technology industry has positive prospects in the long term, however performance in the next one year is expected to be dampened by the widespread effects of Covid-19, said a report by Care Ratings. Despite a prolonged slowdown in the last fiscal, technology spendings across industries remained intact and due to strong deal wins and broad-based growth across verticals and geographies, the industry grew 7.7 per cent to USD 191 billion in FY20, as per NASSCOM estimates.
What may have come to the rescue of the IT industry is yesterday’s MHA announcement of relaxation. The government has allowed the IT-related services to operate at half strength from April 20. This will further help the industry to resume operation on pending projects. The depreciating rupee is also expected to provide a cushion to the business of the IT industry as it majorly depends on exports. More than 75 per cent of the industry’s revenues are sourced from exports to large markets like North America and Europe. India’s software services exports in FY19 stood at USD 77.7 billion, which is equivalent to about USD 6.5 billion monthly, according to RBI data.
However, like other industries, the next one year will be tough for the IT industry as well. With lingering implications of Covid-19, potential loss of software services exports could be in the range of USD 2-3 billion per month in the current year, the Care Ratings report added. In addition, the severe effect of coronavirus pandemic in the markets of advanced nations such as the US, and those in the European Union, the spillovers can be felt by the Indian IT industry as well.