India's Tech Sector Can't Dodge Crisis
2008年10月23日
India's leading technology companies -- the flagships of the country's economy -- doused hopes that they could escape from a spreading global financial crisis anytime soon.
'Our outlook is cautious in the near term given the extent of strain on the global economy,' said Azim Premji, chairman of Wipro Ltd., in a statement Wednesday. That pessimism comes despite a sharp weakening of the Indian rupee, which helps tech companies that earn most of their revenue overseas.
Under Indian accounting standards, Bangalore-based Wipro said net profit for the July-September period rose to 9.78 billion rupees ($200.2 million) from 8.24 billion rupees in the year-earlier quarter. Revenue rose 36% to 65.20 billion rupees from 47.85 billion rupees a year earlier.
Tata Consultancy Services Ltd., of Mumbai, the country's largest tech company by revenue, said net profit for the July-September period rose to 12.71 billion rupees, up 1.5% from 12.52 billion rupees a year earlier, under Indian accounting standards, a far cry from the 40%-plus growth rates tech companies enjoyed in recent years. Revenue rose 25% from a year earlier to 69.53 billion rupees.
The lackluster outlook helped drag Indian stocks lower Wednesday. The benchmark Sensex index on the Bombay Stock Exchange ended at 10169.90, down 513.49 points, or 4.81%. Tech companies were among the big losers, with Wipro's shares down 5.8% at 279.25 rupees. TCS's shares fell 2.6% to 546.35 rupees, and shares in Infosys Technologies Ltd., the other tech giant, fell 3.5% to 1300.35 rupees. The Bombay Stock Exchange's benchmark index has fallen 49.8% this year.
The downdraft trumped two other developments that should have shored up the market. Norway's sovereign-wealth fund plans to invest $2 billion in India over the next three months, according to Norwegian officials. The Norwegian Pension Fund, commonly called the Oil Fund, is one of the largest pension funds in the world. India's stock-market regulator on Wednesday also restricted short selling -- or bets that stocks will fall -- by foreign funds.
The tech industry has seen its once-skyrocketing earnings growth rates plummet this year as the global credit crisis has put a stranglehold on banks and financial institutions, some of outsourcers' largest clients. Now, as the crisis spreads beyond banks, the companies' earlier optimism that they could regain annual growth rates of 40%-plus has disappeared.
Infosys also recently lowered its outlook for revenue this year in the face of the global crisis. The company now expects to earn about $4.75 billion for the fiscal year ending March 31, 2009, citing the 'current economic situation.' That is down from the $5 billion it said it expected to make in July.
The Bangalore-based company also said that it won't raise its bid for U.K.-based Axon Group PLC, effectively conceding the British consultancy company to rival HCL Technologies Ltd., which had trumped an earlier offer from Infosys.
The slowdown in the industry has forced outsourcing companies, some of the country's most active and prized employers, to slow their hiring. Last week, Hyderabad-based Satyam Computer Services Ltd. said it has cut its recruiting target by a third to 10,000 new hires this year.
A rare bright spot for the companies is the weakening rupee. The nearly 20% drop in the Indian currency this year has helped tech companies add as much as 10% to their profit growth, analysts say. But few say they expect the surprising slide in the rupee to continue. The dollar traded Wednesday at 49.3 rupees.
'Until now, the weak rupee has helped the Indian IT firms, including Wipro, even as dollar revenues have slowed,' says Harit Shah, an analyst at Mumbai-based Angel Broking. But, he said, the rupee is unlikely to depreciate further, and 'with dollar revenue likely to come under more pressure, there will be further strain on growth.'
Niraj Sheth / Vibhuti Agarwal
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