Slowdown In India's Software Sector-NASSCOM

The National Association of Software and Services Companies is expecting a growth slowdown in country's software services sector.  Sluggish development in local software companies which serve MNCs has been the underlying cause for this slowdown.As reported by ET, Nasscom which was earlier estimating a 11-14% growth rate in IT outsourcing industry, has now lowered their expectations to the downline of 11%. According to the latest calculations, an estimated $75-77 billion of export revenues will be generated in the year to march 31, 2013.Currency movements are also responsible for reduction in revenues reported by captives, which constitute 20-25% of software exports. Largely varying growth rates among India’s top 5 software services also contribute to the slowdown.

Europe,US markets consume 80% of service exported by domestic companies have seen a rough time this year. Hence, the two digit growth rate still remains an encouraging factor.However, the sector will grow by 18-20% by local currency.Nasscom president Som Mittal said,”The global in-house centres are going through huge efficiency improvement. They are on a cost-plus model”“Growth rate has picked up in September and many companies have indicated that the second half will be better than that of the first half. Based on that, we are pretty confident we will meet the lower end of the guidance.” said Nasscom chairperson N Chandrasekaran.
Nasscom said that in the long term the industry has good growth prospects.

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