Optimism appears to be returning to the information technology (IT) sector as customers' businesses stabilise, giving them the confidence to release at least tactical budgets, if not strategic ones.
For months now, US customers -- the largest spenders on technology -- had been cutting IT budgets sharply due to the uncertainty in the market.
This had led to a drop in the revenues of IT majors such as Tata Consultancy Services (TCS), Infosys Technologies and Wipro Technologies last quarter and prompted them to give lower revenue guidance for the current quarter and fiscal.
It now seems that the spending cuts in some of the verticals have halted, bringing to an end the instability in the industry.
Ganesh Natarajan, a member of the chairman's council of IT services lobby Nasscom, confirms that the mood of IT customers is gradually turning positive. "There is a sense in the market that spending has hit the bottom and that from here it (spending) will only go up. What we are seeing is that the pace of decline (in IT budget) has come down and tactical budgets are getting released though it would still take some time before strategic budgets are allocated."
Rajendra Shreemal, head of investor relationship and treasury at Wipro Technologies, says a higher degree of stability in the market is giving spenders of technology the confidence to undertake projects. "There is certainly some change in the outlook of customers, who were pessimistic some months back. Their positive outlook is due to good data points."
Shreemal says a sense of stability is being felt across verticals among "good companies."
Going by a TCS spokesperson, the banking, financial services and insurance sector (BFSI) sector, which was the first to be gripped by the crisis, has begun "coming out of it," though manufacturing, retail, hi-tech and others, which were affected later, are yet to find their way. "The level of paralysis in the market has come down with verticals like BFSI adjusting to the new reality. We have seen JP Morgan, Goldman Sachs, Citibank and others come out with good numbers, but we have yet to see customers in verticals that slipped into crisis later, stabilising."
Source: DNA
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