Recession fears could affect IT-BPM investments in the US, EU
Concerns over inflation and recession in the United States (US) and European Union (EU) could impact incoming investments in its IT-Business Process Management (IT-BPM) services in the near- to mid-term.
However, experts said that the long-term demand megacycle is “strong.”
IT analyst and advisory firm Everest Group said the IT services industry will grow by 6.7% year-on-year in organic constant currency terms by March 2023, down from the 10.4% growth in the 12 months ending March 2022.
The primary reason for this deceleration is the high growth in March 2022 which benefited from a weak performance in the previous fiscal year.
As concerns around inflation rise, the IT index on the BSE has fallen by 17% in the past six months even as IT firms themselves have reported strong numbers.
Between 2021 and 2024, global growth is projected to slow by 2.7%points, according to the World Bank, more than twice the slowdown seen between 1976 and 1979, when the world last saw stagflation.
Gartner Research Senior Research Analyst DD Mishra added, “In the event that there is a recession, there could be some slowdown of transformation work which will actually give system integrators some relief from the high demand environment, attrition, and wage inflation.”
