Various factors like cutting down on discretionary spending and slowing down on demand could cost the revenue of IT companies to a greater extent. With the current situation being bad many IT companies like Infosys, Wipro have said that they will not be providing revenue growth guidance for the financial year 2021 and the June quarter. Along with these companies, Cognizant also refrained itself from revenue growth guidance for the full year.
The revenue pressure will be high on the IT company for the year 2020-21, according to a rating agency Crisil. This could be due to Covid-19. The growth could be very low, around 0-2% which is way less than in the 2018 fiscal year. This analysis is done on the largest 15 firms which contribute to the 70% revenue of the sector.
Analysts predict that this COVID slowdown will have a huge impact on various sectors and across different industries. Emkay Research has said that even though there is no blow-up yet for any organization, the disruptions across various verticals could result in a huge loss for the Indian IT companies.
TCS CEO and Wipro CEO recently had said that due to this COVID, there could be price re-negotiations between the companies and the clients. Typically, the deals between companies and the client most probably happen between March and May. But this time, during that period the clients are focused on cutting the emerging business risks and defer the discretionary IT spend. Analysts also said that for certain areas in IT such as cloud, virtualization, etc the demand had increased post lockdown. Several experts and top VPs of various companies believe that any product which helps the client to move their work more towards remote will be of huge demand.