We remain cautiously optimistic, R Chandrashekhar, President, Nasscom

In a chat with ET Now,R Chandrashekhar, President, Nasscom, says companies in India are actually making whatever adjustments and adaptations are required to the changing market conditions. Edited excerpts

ET Now: The commentary from the two large behemoths from the IT space has been mixed. We had a couple of midcap companies as well and while the delivery was not the greatest, they were hopeful. But clearly, a guidance cut from a bellwether company does not augur well. Is there any industry specific near-term slowdown visible or is what Infosys did more of a company specific issue, what do you think?

R Chandrashekhar: First and foremost, in the previous session you have been talking about the cloud but let me assure you that there are really not too many clouds here or at least all the clouds have a silver lining. So, as we see it, all the signals and fundamentals remain essentially strong. If you look at the growth pattern across verticals, across geographies and notwithstanding an occasional quarter or a company which may show a different kind of result, I think it would be wrong to draw broader inferences from that. If you look at the revenue growth, if you look at the investments that are being made in digital, at the market signals and the growth in demand, all of these present a lot of opportunities. That does not mean that there aren’t any challenges.

Obviously, there are plenty of challenges we know about the economic ups and downs that are taking place in Europe both before and post Brexit vote. We have seen the ups and downs in other economies as well. But I think overall, we remain cautiously optimistic and we see no reason and no signs that warrant any change in the prognosis that we had given earlier.

ET Now: That is heartening to hear and I am deducing from your answer and I do not want you to comment on a specific company but I am guessing the inferences to what happened to Infosys with their guidance cut. People, of course, doubt whether they can do that as well and it is a more a company specific issue.

R Chandrashekhar: You started by saying I would not ask you to comment on a company but I would not like to comment on any particular company performance. In the kind of uncertain world that we live in and the kind of turbulence that is there, it would be very hazardous to draw generalisations based on one quarter performance, one company’s performance, one vertical’s performance, etc. I think if you analyse all the data, then you can see that it is spread across all the different areas.
There are all these verticals and all the geographies showing growth including Europe and therefore I think we have good reason to believe and I think all the evidence indicates that the companies in India are actually making whatever adjustments and adaptations are required to the changing market conditions and the changing demand pattern of the client companies.

ET Now: What is more worrying at this time and point? Is it the fact that Brexit is yet to play out or do you think it is the possibility that could add to difficulties going forward for the sector?

R Chandrashekhar: As I said while the situation is brimming with opportunities, both in terms of technology trends, market trends, demand trends and so on. There are many challenges, for example, Brexit was not quite expected, very few people believed that it would actually happen. Now that has come to pass. The second is initially, we saw a fairly significant exchange rate fluctuation which surely would have translated into some impact but then things recovered quickly. We saw a similar impact on the stock market, again things recovered quickly. So I think that over the long term, how it plays out is going to be important but we do recognise that from an India perspective, while Brexit does pose short term challenges, in the long term it does lead to many opportunities and some would argue that in the long term opportunities may actually outweigh any possible downsides.

Of course, in an interconnected world, what happens in other economies and we have seen the kind of incidents that are taking place in Europe which can have a substantial impact and obviously if there is a very widespread impact then that could translate into some impact in India. But we should have a sense of proportion because today out of the exports nearly 60 per cent, in fact, over 60 per cent is to the US, about 17 per cent is to UK and single digit percentage to the rest of Europe. So I do not think that there is any reason to be unduly concerned, while of course all these factors have to be dealt with and depending on which geography, which vertical, a particular company is operating, what kind of business strategy they have taken and what may be some short term implications of all of those things, we will see some variations across companies.

But we are talking from Nasscom across the whole industry, not about a particular company and therefore when you look at it from that broader length then I think the situation is certainly presents a lot of ground for continued optimism. We have seen hiring also going up, we have seen companies, for example, enhancing their productivity, both by reducing the size of the bench strength by resort to automation and increasing the productivity of employees who are already there so all these adaptations whatever changes are required, I think, companies are doing and we believe that they are well positioned for the opportunities that lie ahead. We definitely think that the value proposition that India offers across the spectrum, large companies, small companies, different verticals, geographies offers an unbeatable advantage at this point and will continue to do so.

ET Now: The benchmark growth rates are about 12 per cent for the year, give or take a few points here and there, if companies clock in about a 1-1.25 per cent for this quarter, that is quarter one, due to whatever reasons, do you think the remaining nine months have the potential within them to enable IT companies to clock in an average of 3-3.5 per cent quarter on quarter?

R Chandrashekhar: Well, I am not sure where you got those numbers from because what we had said in February and that is the time-- it was 10-12 per cent across the industry, number one. Number two is it varies across...

ET Now: I am using the higher end 12 per cent and Infosys has done this, if 12 per cent is the upper end wherein the successful companies could clock in and if they clock in 1 per cent can they clock in the 3.5 per cent?

R Chandrashekhar: Well as I said, the question has two parts, one is you have taken the upper end of the range that we had given and the second is you have taken a particular company’s performance in a particular quarter and then tried to see how that will play out across the whole industry, across all the quarters.

As I have said in the beginning that this is hazardous. We feel that we are likely to be well within the range that we had indicated. There is uncertainty but as of now, whatever uncertainties have played whether it is Brexit or whether it is the economic ups and downs we do not think that any of these developments warrant any change in what we had said and we think that the industry as a whole will achieve that range.