“Downgrade of US debt rating and debt crisis in Euro zone will impact recruitments in the Indian IT sector and hiring is expected to go down by about 30% during the course of next few months,” Assocham secretary general DS Rawat said
New Delhi: Major IT and BPO companies in the country are jittery amid fears of another economic slump in the US and a debt crisis in Europe, reports PTI quoting industry body Assocham.
About 55% respondents said that while the sector is unfazed from S&P’s downgrade of the US credit rating and that the slowdown is temporary, it would surely hamper the hiring activity across the sector.
“Downgrade of US debt rating and debt crisis in Euro zone will impact recruitments in the Indian IT sector and hiring is expected to go down by about 30% during the course of next few months,” Assocham secretary general DS Rawat said.
The downgrade by credit ratings agency Standard & Poor’s in August had triggered concerns that the $60 billion software services industry—which gets more than 60% revenues from the US market—would be hit.
IT industry body Nasscom, along with top players, had however, exuded confidence that the sector will ‘sail through’ the crisis.
Assocham interacted with about 140 representatives, directors, CEOs, CFOs, chairmen and MDs of companies offering IT/ITes and BPO, BTO, KPO services in various domains like pharmaceuticals, Banking, Financial Services and Insurance, auto, FMCG and manufacturing.
The study was carried out across Ahmedabad, Bangalore, Chandigarh, Chennai, National Capital Region (Gurgaon and Noida), Hyderabad and Pune.
“The US and Europe account for over 80% of India’s $60 billion IT industry and macro-economic uncertainty in these parts of the world are bound to make the market gloomy,” Mr Rawat said.
About 25% of respondents said the current round of global economic crisis won't have much of an impact on India, considering the strong domestic demand of goods and services together with their exposure to other avenues like Asia-Pacific and other parts of the world.
Nearly 20% of the respondents said Indian firms may report sluggish business during the course of next few months due to the slowdown.
Besides, the industry is already reeling under high interest costs, high inflation and the stock market is also in a sombre mood, the study added.
Apart from slowdown in foreign direct investment (FDI), growth in exports and domestic private consumption might also slump, Rawat said.
“Oil prices have remained very steady despite global economic concerns while in 2008 they declined sharply in a small period. It reduces space that monetary policy has in dealing with the situation,” RBI deputy governor Subir Gokarn told reporters
New Delhi: With international oil prices continuing to remain high, the Reserve Bank of India (RBI) may not have much scope to reduce interest rates in its forthcoming mid-year monetary policy review next month, reports PTI.
“Oil prices have remained very steady despite global economic concerns while in 2008 (when recession hit the global economy) they declined sharply in a small period. It reduces space that monetary policy has in dealing with the situation,” RBI deputy governor Subir Gokarn told reporters here.
The RBI, which has raised key interest rates 12 times since March 2010 to contain inflation, is scheduled to announce mid-year monetary policy review on 25th October.
International oil prices have remained persistently high.
Brent crude oil was trading at over $107 a barrel despite fears of double-dip recession hitting global economy.
Mr Gokarn’s statement comes within days of RBI governor D Subbarao defending the tight monetary stance of the central bank to check inflation, which has remained near the double-digit mark despite series of interest hikes.
While the short-term borrowing (repo) rate has gone up by 3.5% since March 2010, inflation has remained stubbornly high at near 10%, much above the RBI’s comfort level of 4%-5%.
In addition to other factors, rising crude oil prices and rupee depreciation have been fuelling inflation at home. The oil marketing companies has revised upwards price of petrol twice in the last six months.
Mr Subbarao, while speaking at a function in New York, has said, “At this high level, inflation is unambiguously inimical to growth; it saps investor confidence and erodes medium term growth prospects.”
The move is being considered at a time when the stock markets are volatile due to debt problems in several advanced economies and domestic concerns like inflation and high interest rate. Besides, there are concerns over flight of foreign capital in the recent times
New Delhi: With an aim to further liberalise the capital market, the government is contemplating to allow foreign individuals—Qualified Foreign Investors (QFIs—to buy equities directly in stock markets, reports PTI quoting a senior finance ministry official.
Currently, only overseas High Networth Individuals (with a minimum networth of $50 million), which are registered as sub-account of Foreign Institutional Investors (FIIs), are allowed to participate in the stock market.
“We are exploring the options to widen the class of investors in the Indian equity market by allowing QFIs,” the official told PTI.
The decision, he added, would help in projecting India as a global investment centre and attracting equity capital from abroad.
The move is being considered at a time when the stock markets are volatile due to debt problems in several advanced economies and concerns on domestic fronts, like inflation and high rate of interest. Besides, there are concerns over flight of foreign capital in the recent times.
FIIs have pulled out Rs632 crore from Indian equities so far in 2011.
In order to promote the portfolio investment route, the government last month allowed QFIs—individual, group or association—to invest up to $13 billion in equity and debt schemes of mutual funds in the infrastructure sector.
“We are trying to collect and analyse data on QFI investments in mutual funds,” the official said, adding the decision has made it easier for overseas investors to participate in the infrastructure sector projects in India.
While the official did not provide further details regarding QFIs in capital market, he said, if allowed, it would be on the same pattern as in mutual funds.
For mutual funds, the government has allowed two routes—holding mutual fund units in demat account through Securities and Exchange Board of India (SEBI) registered depositary participants and holding MF units via Unit Confirmation Receipts.