Nasscom lowers FY17 growth outlook

Information technology (IT) industry body Nasscom on Thursday projected a 10-12 per cent growth for the Indian software services segment for the financial year 2017, lagging the 12-14 per cent growth forecast it had made for the current financial year.

A volatile global economy and currency fluctuations, especially the weakening of the rupee against the US dollar, continued to impact India’s information technology and business process management (BPM) services segments.

The industry barely managed to meet the lower end of the Nasscom forecast. For FY16, the segment’s export revenue grew by 12.3 per cent to reach $108 billion. The earlier forecast was 12-14 per cent growth. For FY15, export revenue grew 13.1 per cent in constant currency.

Nasscom, however, said that despite all the volatility, the industry managed to maintain double digit growth. “The need of the hour for the industry is to fundamentally transform its business models, solution offerings, organisation structure and capabilities to strengthen its market leadership position,” said R Chandrashekhar, president, Nasscom. “Further, going forward, revenue growth alone may not be an adequate indicator of the growing capability and capacity of India’s technology industry. Factors such as investment, valuations, digital solutions portfolio, impact etc. would also need to be considered in assessing the industry performance and contribution to the economy.”

When asked, why Nasscom has downgraded the growth numbers, Chandrashekhar said, “We had estimated that the domestic segment will grow at a certain pace on the back of the announcements made by the government and trends that we saw. However, many of those have not taken off. As and when they do, we will see a larger impact.”

National Association of Software & Service Companies (NASSCOM)