Low demand and focus on US, Europe caused slowdown in IT sector, expert

An analyst in the IT sector has said that the low demand by American and European companies and focus of Indian service providers on the US and European markets have resulted in the slowdown in the Indian IT industry in the previous financial year till March 2012.

Kumar Parakala, head of IT advisory at KPMG India said that the India It firms focused on traditional US and European markets and failed to explore emerging markets like China to fill the gap in demand. A series of Indian IT firms have missed quarterly targets and the year has been a difficult one for the industry.

"These IT firms are still growing though it may not be at the rates they promised some time ago," said Kumar.

Meanwhile Garter in a new report that the top five Indian IT services providers have recorded a growth of 23.8 per cent in the previous year compared to 7.7 per cent growth recorded by the overall global IT services market.

The top five firms including TCS, Infosys, Wipro, HCL Technologies and Cognizant grew higher than the industry average indicates India's strong hold on the It services market. Cognizant, which is listed on Nasdaq, recorded 33.3 per cent growth in revenues during the year while TCS revenue grew by 29.4 per cent in 2011 as compared to 0.9 per cent in 2010.

HCL Technologies revenues recorded a growth of 26.2 per cent in 2011 compared to 0.3 per cent in 2010 while Infosys grew at 17.8 per cent in 2011 as compared to 0.7 per cent in 2010. The fifth, Wipro grew at 12.3 per cent during the year. The report also showed that among the smaller IT service providers, Genpact grew 27 percent and Syntel rose 21 percent during 2011.

Parakala also said that in the coming year, there can be better expectations once the US presidential elections have taken place and the steps taken by European Central Bank begin to show results in solving the European financial crisis.

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