According to Wipro, Indian IT companies to be impacted one year down the line
There seems to be no end to bad news in the information technology (IT) sector. The latest is the over 32% plunge in the enterprise solution major SAP's licence revenue in the fourth quarter to €418 million against €622 million a year ago.
This is the first drop in the German business software company's licence revenue since the global economic crisis set in. Its American rival Oracle saw new licence revenue fall 6% to $1.5 billion (€1.13 billion) in the third quarter ended February. Oracle is yet to come out with fourth quarter results.
The slips at both firms will directly hit package implementation/enterprise solution income of Indian tech companies, which earn a significant portion of their revenue from this service line. Indian IT service providers implement enterprise solutions for companies that buy licences from enterprise resource planning software providers.
Rajendra Shreemal, head of investor relationship and treasury at Wipro Technologies, said any impact of the whittled down licence earnings of the business software companies would be felt by IT service companies a year down the line. "There is a lag between the time a company buys a software licence and implements it. Yes, we will be affected by dwindling new licence revenues in the market, but it will take some time trickle to down to us," Shreemal said.
Source: DNA
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