Indian IT services industry to grow 8-11% in FY19

The Indian IT-ITeS industry is expected to grow between 8-11 percent in FY19, driven by an increase in discretionary spends in the IT space, CARE Ratings said.
India IT services industry 2018Digital business for most firms will act as a catalyst for revenue growth of the industry in coming years, Madan Sabnavis, chief economist and Vahishta M. Unwalla, research analyst  at CARE Ratings said.

The Indian BPO/ITeS industry may see a slowdown in hiring in the coming quarters due to introduction of minimum wage hikes in the country and automation taking over.

Automation is cutting down on jobs and talent acquisition in the BPO sector at an overall level.

There will be an increase in local hiring in US, payment of higher wages, which will take a hit on the margins of IT majors. This is due to rising protectionist measures in the form of H1-B visa restrictions.

The Indian IT-ITeS industry grew ~8 percent to $167 billion in FY18, where export revenues contributed $126 billion (75 percent share) and domestic revenues $41 billion (25 percent share).

BFSI, manufacturing, retail and consumer packaged goods, telecom and media and entertainment are the largest IT spending industries.

Americas and Europe cumulatively account for ~80 percent of the total export revenues for IT majors.

Production of computer hardware is estimated to have reached Rs. 21,401 crore in FY18, exhibiting a CAGR of 5 percent in the past 5 years.

The industry employs nearly 3.97 million people in India. India has a low-cost advantage by being ~5-6 times cheaper than US. The industry attracted FDI inflows worth ~$32.23 billion between April 2000 and June 2018.

The Indian IT industry has a significant contribution to the Indian economy being sized at ~7.9 percent of the country’s GDP, along with being the largest contributor in total services exports (~45 percent).