The COVID-19 pandemic has hit the Indian IT services industry hard. According to rating agency ICRA, the sector is expected to witness a negative growth up to -3 per cent in the financial year (FY) 2021, as compared to an earlier forecast of 6-8 per cent growth.
IT firms are managing to overcome supply-led challenges through the work-from-home model, however, the challenges on the demand front continue to persist.
“The US and the Eurozone which generates more than 80 per cent of IT Services export revenues will see their GDP contract by -8 per cent and 10.2 per cent respectively in 2020. The first half of FY2021 will also see impact in the form of price discounts and extended furlough requests by clients as they restructure their businesses,” said Gaurav Jain, Vice President, ICRA.
As a silver lining, Jain said that the pandemic is accelerating the secular trends of core modernization, usage of collaborative technologies, and cloud migration.