Indian IT sees favorable outcome from U.S. Fed commentary
NEW DELHI, INDIA — Demand for tech services in India is expected to improve following the United States (U.S.) Federal Reserve’s latest monetary policy decision and economic projections.
Last December 13, the Federal Reserve announced that they would hold their benchmark interest rate steady, extending a reprieve for borrowers after the fastest series of hikes in four decades. The central bank is also projecting three rate cuts in 2024.
In an interview with The Economic Times, industry experts said that easing inflation and future rate cuts may spur U.S. firms to increase tech budgets and restart stalled projects. This may bring more outsourcing deals for Indian IT service providers.
Outsourcing expert Pareekh Jain also stated that the Fed’s “inflation data and commentary on three potential rate cuts through the year will drive higher consumer spending and optimism among the IT clients, leading to investment flow.”
“This is likely to also benefit segments that involve investments dependent on interest rates, like digital transformation programs that have slowed down over the past year,” Jain added.
After the Fed news, Infosys, Tata Consultancy Services, and HCL Tech saw their shares jump by 5-6%. Other noticeable impacts are expected from January to March 2024 or the following quarter.
High U.S. rates and inflation recently hampered tech spending and deal momentum for Indian IT firms. Despite healthy deal wins, revenue lagged due to longer contracts, delayed ramp-ups, and more project scrutiny.
