After the great economic boom has over it is speculated that it will be followed by a global recession, and this blog will answer how this speculated economic slowdown effects IT industries in 2019. A recent attack on Saudi Arabia’s oil facilities, looming threat of Brexit, global trade war between USA and China, rise in global terrorism, mass shootouts in USA and “ national jingoism” spreading all over the world; gives more reasons for a worse recession to come. Today, we will talk about the initial effects recession will have on the software industries of India.
The global IT services market is predicted to reach $1.031 trillion by the end of 2019, even though the growth rate slowed down to 3.8% in 2019, compared to 6.7% last year. According to estimates, out of the total IT services market, almost 30% of that is outsourcing work, and of the total outsourcing market share, Indian companies share is about 60%, converting to more than $180-200 billion in contracts.
With that being said, any major changes in the market might put a toll on Indian IT industry, especially the startups. Earlier in previous quarter this trend seem to be followed as only two major tech giants; Infosys Ltd and HCL Technologies Ltd, saw the revenue growth while others remained either flat or were in loss. Cut in clients’ budgets, deferred projects and increasing expenses of maintaining talent in the US and Europe had reduces every other tech company’ growth rate, making them tremulous thinking about the future.
Every businessman seems to be willing to cut their costs in order to avoid losses, and this cost cutting directly cuts their expenses in maintaining servers which they do not feel the need of, resulting in taking off of a major chunk from IT sector.
But, despite all this, the future does not seem to be as bleak as that of other industries. The recent tax cuts from the government, and many boost events from both private companies and government, gives a hope for IT sector. And while hardware sales has been reduced significantly, experts say that big companies would not change their plan of digital transformation and thus the market would not be down significantly. Although, price cuts would be a possibility, many IT firms considering it as a slap on the wrist, while other industries suffer badly.