How negative trickle-down in IT slowdown threatens India's tech hubs

Bengaluru, Gurgaon, Hyderabad, Noida, Pune, New Bombay are all cities that have grown substantially due to being desirable locations for the IT and ITES industries. The tech sector has run into a roadblock. This is partly caused by cyclical factors and geopolitics. It is also due to rapid, disruptive advances in technology. An industry-wide slowdown could mean a negative impact on consumption in tech-hubs. Industry association, Nasscom, recently came up with guidance that earnings would be almost flat through this financial year. Export revenues are likely to rise by 7-8 per cent in constant currency terms in FY2017-18. That's lower than the 8.6 per cent growth logged in FY2016-17. Exports were $116 billion in 2016-17 while domestic revenues amounted to $24 billion. Domestic revenues may however, rise by 10-11 per cent, which could be a saving grace. The industry may add 1.3 lakh to 1.5 lakh jobs this financial year, which is again, lower than net new hirings of 1.7 lakh in FY2016-17. Future & Option Trading Tips

Headwinds include uncertainty about H1B visas to service US clients and also increased threats of protectionism. A stronger rupee doesn't help since it makes services more expensive. New drivers could be growth in fintech and high potential in new digital businesses according to Nasscom estimates. Re-skilling is likely to be necessary for anywhere up to half of the 4 million-odd industry workers. McKinsey concurs about the need to retrain half or more of the workforce. But the consultancy outfit makes grimmer projections of 1.75 lakh to 2 lakh jobs being shed annually over the next three years. Analysts and investors have started to discount the IT slowdown over the past year. The industry has seriously underperformed the overall market. While the Nifty is up by 15.5 per cent in the past 12 months, the Nifty IT index is down 11.5 per cent. The Nifty PE is running at 24-plus (weighted free-float average) while the IT Index PE is at 16.5. This is a comedown for an industry used to high double-digit growth and high valuations. Financial Astrology Tips