Now it's time to explore our India by providing
IT stable outlook by 2012. Fitch, a ratings agency, has affirmed stable outlook
for the India information technology (IT) services sector in 2012 due to its
strong liquidity position. It has warned that revenue growth of the IT sector is
expected to moderate this year. Fitch said in its annual report - 2012 Outlook:
Indian IT Services - “The revenue growth may decline from a slowdown in the
demand for IT services because of uncertainty regarding economic growth in the
key markets of US and Eurozone.” Despite an expected moderation in revenue
growth in 2012 from 2011 levels, the outlook for the Indian IT services sector
is stable on the back of its strong liquidity position. Revenue growth may
decline from a slowdown in the demand for IT services because of uncertainty
regarding economic growth in the key markets of US and Eurozone.
Further the news is that Fitch notes employee
hiring increased in 2011 in anticipation of improving demand in the sector,
resulting in higher wage costs; and thus negatively impacted EBIDTA margins for
the nine-month period ended December 2011. The moderation in revenue growth is
likely to exert further margin pressures, though the depreciating Indian rupee,
which lost around 15 per cent of its value against the US dollar during
January-December 2011, is likely to provide some relief to the margins over the
short-term as about 60 per cent of Indian IT export contracts are
dollar-denominated. However, over the medium-term, some of the advantage may
erode due to the increasing competition.