Indian IT services revenue likely to be flat in dollar terms this fiscal: Icra

Icra said while Covid-19 remains an ongoing concern, enterprises have shifted to virtual models that have pushed the acceleration and the credit profile of Indian IT companies

The Indian IT services revenue are expected to be flat in US dollar terms in FY21 as against a previous estimate of a negative growth, helped by acceleration in demand for digital services, ratings agency Icra said on Thursday.

Icra said while Covid-19 remains an ongoing concern, enterprises have shifted to virtual models that have pushed the acceleration and the credit profile of Indian IT services companies is expected to remain stable.

"The sector growth is expected to remain flattish in USD terms in FY2021 (compared to previous estimate of nil to -3 per cent). The relatively better performance has been led by higher demand for digital technologies," it added.

Icra Vice President Gaurav Jain said the global spread of the coronavirus has resulted in simultaneous supply and demand shocks.

IT Services companies have managed to overcome supply led challenges through uninterrupted delivery of IT services, through work-from-home model but the challenges on the demand front continue to persist.

The US and the Eurozone, which generates more than 80 per cent of IT services export revenues, will see their GDP contract in CY2020, he said adding that the first half of FY2021 will also see impact in the form of price discounts and extended furlough requests by clients as they restructure their businesses.

"As a silver lining, the Covid-19 pandemic is accelerating the secular trends of core modernisation, usage of collaborative technologies and cloud migration as companies shift to digital business models to pursue work-from-home model which will benefit IT services companies," Jain said.