Mumbai: The sales growth of Indian technology companies is likely to slow down to an average of 0-2% in 2020-21 (Apr-Mar) because of lower spending on technology due to reduced economic activity and a likely global recession, said Fitch Ratings.
This compares to an average compounded growth of 6-8% seen in large-cap technology companies in the last five years, and a growth of 10-12% seen in midsized companies.
Fitch has also revised the outlook for the sector to negative. While spending will be the hardest hit from sectors such as travel and transportation, a part of this impact will be absorbed by higher demand for technology service support due to remote working and business continuity planning.
Fitch sees the organic growth in Hexaware Technologies falling to low single-digits in 2020 as against the 12% estimated earlier as the company's US-based customers delay or cancel non-essential new projects amid a deterioration in business.
The overall impact of the virus outbreak on Indian information technology firms will spill over to 2021 as most clients will have less financial flexibility to invest after the economic turmoil and will be more cautious about discretionary spending on technology, Fitch said.
