IT-BPM industry feeling the pinch of global slowdown, political uncertainties

Many challenges Services sector growth shows moderation

India’s services sector growth, which was highly resilient even during the global financial crisis, has been showing moderation in recent times, the Survey said.

However, pick up is seen in recent months with some segments of the sector showing better performance.

This is also reflected in the Nikkei Services PMI of India which rose to 53.1 in June 2017, the strongest since October 2016 supported by strong upswing in inflows of new business, it said.

According to IT industry body Nasscom, in 2016-17, India’s total revenue (exports plus domestic) of the IT-BPM sector, including and excluding hardware, is expected to touch $154 billion and $140 billion, with growth of 7.8 per cent and 8.1 per cent respectively.

However, it also said the $150-billion IT-BPM industry is feeling the pinch of the global slowdown and political uncertainties as clients go slow on decision-making and investment processes.

The Indian IT-BPM sector is affected not just by the global slowdown and challenging market access situation, but other challenges as well, the Survey said.

The telecom sector has made rapid strides during the last few years because of several reforms and initiatives undertaken by the Department of Telecommunications (DoT), it said.

Mobile industry

India, with 275 million smart-phone subscribers, has outpaced the US to become the second largest smart-phone subscriber base in the world. Since September 2015, 38 new mobile manufacturing units have been set up, which has ramped up the manufacturing of mobile phone units in 2015-16 by 90 per cent.

The mobile industry in India contributes 6.5 per cent ($140 billion) to country’s GDP, and employs over four-million people (direct and indirect), it said adding that the industry is projected to grow rapidly. The survey has special mention of the new entrant – Reliance Jio Infocomm – saying the competition ‘extended from cheaper calls to cheaper data’.

However, the industry also faces the issue of higher spectrum charges, it said and added that what was worrying was that the share of the telecom sector in the non-performing assets (NPAs) had increased.

“Though the total NPAs of telecom sector in public sector banks (PSBs) has fallen to ₹2,335 crore in 2016-17 from ₹3,465 crore in 2015-16, the share of NPAs of telecom sector in total NPAs of infrastructure sector increased to 8.7 per cent in 2016-17 from 5.0 per cent in 2015-16,” the Survey said.

Digital campaign

The Survey said the government has placed emphasis on growth of telecom sector in the country for the success of Digital India campaign. It highlighted that the government has brought reforms in spectrum management through the process like spectrum sharing, spectrum trading, spectrum harmonisation and most importantly, spectrum auction.

The government is taking a lead in adopting digital technologies and is one of the most proactive users of social media as a means to communicate with the public.

Long-term initiatives

It also intends to make India a hub for cyber security solutions for the world. Through long-term initiatives like Digital India, Make in India, Smart Cities, e-Governance, push for digital talent through Skill India, drive towards a cashless economy and efforts to kindle innovation through Start-up India, uptake of technology is expected to grow substantially.