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IT Firms Face Declining Revenue Growth
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IT Firms Face Declining Revenue Growth
With the deepening recession resulting in project cancellations and delays in clients` decision-making, the revenue growth of IT majors is likely to be restricted in the fourth quarter of FY2009.
Indian vendors have witnessed several project cancellations during the third and fourth quarter of the fiscal year 2009, according to a domestic brokerage firm.
A India strategy report of Motilal Oswal foresees that IT companies will report quarter-on-quarter dollar revenue declines owing to stressed volumes and declining realizations. This will be the second consecutive quarter where the sector will see dollar revenue degrowth. The rupee has depreciated 4.69 percent against the US dollar during the March quarter, while on an year-on-year basis it has depreciated over 27 percent.
"Top-line growth even in rupee terms is expected to remain flat to marginally negative on an organic basis during the quarter," brokerage firm Sharekhan said in its IT earnings preview. Meanwhile, the appreciation of the dollar against other international currencies (euro and pound sterling) would impact the dollar term revenues of the front-line IT firms. "This is likely to have a negative impact of 2-3 percent on the dollar term revenue growth rate as the IT companies bill around 25-30 percent of their revenues in pound sterling, euro and Australian dollar," Sharekhan report said.
IT majors Infosys, Wipro, HCL and Tata Consultancy Services, whose fourth quarter starts from April 15, also are not expected to do well.
Source:
http://www.cxotoday.com/India/News/IT_Firms_Face_Declining_Revenue_Growth/551-10
Indian vendors have witnessed several project cancellations during the third and fourth quarter of the fiscal year 2009, according to a domestic brokerage firm.
A India strategy report of Motilal Oswal foresees that IT companies will report quarter-on-quarter dollar revenue declines owing to stressed volumes and declining realizations. This will be the second consecutive quarter where the sector will see dollar revenue degrowth. The rupee has depreciated 4.69 percent against the US dollar during the March quarter, while on an year-on-year basis it has depreciated over 27 percent.
"Top-line growth even in rupee terms is expected to remain flat to marginally negative on an organic basis during the quarter," brokerage firm Sharekhan said in its IT earnings preview. Meanwhile, the appreciation of the dollar against other international currencies (euro and pound sterling) would impact the dollar term revenues of the front-line IT firms. "This is likely to have a negative impact of 2-3 percent on the dollar term revenue growth rate as the IT companies bill around 25-30 percent of their revenues in pound sterling, euro and Australian dollar," Sharekhan report said.
IT majors Infosys, Wipro, HCL and Tata Consultancy Services, whose fourth quarter starts from April 15, also are not expected to do well.
Source:
http://www.cxotoday.com/India/News/IT_Firms_Face_Declining_Revenue_Growth/551-10
