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In an interview to CNBC-TV18, Som Mittal, president, NASSCOM says he expects IT sector growth in double digits. "We had given a guidance that we will have a growth of 11-14 percent this year. Our review, after six months, is that we will still be in double digits. We will still be in double digits and probably closer to the lower end of our guidance, 11 percent," he adds.
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Below is the edited transcript of his interview with CNBC-TV18's Latha Venkatesh and Ekta Batra.
Q: You are expecting a growth of around 9-11 percent. Can you give us the likely trends that you are seeing at this point in time within the IT space? Where do you expect growth to close up in FY13?
A: We had given a guidance that we will have a growth of 11-14 percent this year. Our review, after six months, is that we will still be in double digits. So, it is not 9-11 percent. We will still be in double digits and probably closer to the lower end of our guidance, 11 percent.
It is clear that the economies continue to be uncertain. There is turmoil. The visibility is less, but there are some factors which continue to drive growth. One, it is clear that companies are looking at transforming their business models. As they do that, technology is the centerpiece of that transformation because that is what will drive the changes that they are making.
Second, we have drivers like convergence of mobile, social media, cloud coming in together. I think that is also driving business for us. In the first two quarters, we have seen many companies do extremely well in terms of getting both new clients and increasing their penetration in the existing and new customers.
Also, over the last three to four years, after the downturn started in 2008, companies started diversifying their geographical base as well as the verticals that they were in. Our analysis shows that, in the last four years, the new emerging verticals are now 16 percent of the pie as compared to 13 percent that it used to be on a smaller base. Similarly, new geographies contribute fairly large percentage now of their business. That means they are diversifying beyond US and Europe as well. So, I think those are the drivers for the industry.
Q: What about billing? Even if you get volume-wise business growth of about 11 percent, will it mean in revenue terms a little lower?
A: This is not by effort, this is by dollar revenue. In this, we embedded the fact that we have about 20 percent of our business that comes from what we call Global In-house Centers (GICs). In many of those corporations, there has been a worldwide freeze. Infact we were probably expecting a lower growth rate, sub-10 percent growth rate in the GICs, which is bringing it down.
But in dollar terms, we will continue to see growth. The outlook for 2013, as we see right now, the trend seems positive. I think the pipeline is good. We are seeing some large contracts coming in. I think that should augur well for the industry.
Also read: Infosys bags about USD 50m deal from MCA
Below is the edited transcript of his interview with CNBC-TV18's Latha Venkatesh and Ekta Batra.
Q: You are expecting a growth of around 9-11 percent. Can you give us the likely trends that you are seeing at this point in time within the IT space? Where do you expect growth to close up in FY13?
A: We had given a guidance that we will have a growth of 11-14 percent this year. Our review, after six months, is that we will still be in double digits. So, it is not 9-11 percent. We will still be in double digits and probably closer to the lower end of our guidance, 11 percent.
It is clear that the economies continue to be uncertain. There is turmoil. The visibility is less, but there are some factors which continue to drive growth. One, it is clear that companies are looking at transforming their business models. As they do that, technology is the centerpiece of that transformation because that is what will drive the changes that they are making.
Second, we have drivers like convergence of mobile, social media, cloud coming in together. I think that is also driving business for us. In the first two quarters, we have seen many companies do extremely well in terms of getting both new clients and increasing their penetration in the existing and new customers.
Also, over the last three to four years, after the downturn started in 2008, companies started diversifying their geographical base as well as the verticals that they were in. Our analysis shows that, in the last four years, the new emerging verticals are now 16 percent of the pie as compared to 13 percent that it used to be on a smaller base. Similarly, new geographies contribute fairly large percentage now of their business. That means they are diversifying beyond US and Europe as well. So, I think those are the drivers for the industry.
Q: What about billing? Even if you get volume-wise business growth of about 11 percent, will it mean in revenue terms a little lower?
A: This is not by effort, this is by dollar revenue. In this, we embedded the fact that we have about 20 percent of our business that comes from what we call Global In-house Centers (GICs). In many of those corporations, there has been a worldwide freeze. Infact we were probably expecting a lower growth rate, sub-10 percent growth rate in the GICs, which is bringing it down.
But in dollar terms, we will continue to see growth. The outlook for 2013, as we see right now, the trend seems positive. I think the pipeline is good. We are seeing some large contracts coming in. I think that should augur well for the industry.