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Indian tech firms' results to echo tremor of Iraq war
Wednesday, 09 April 2003, 19:30 IST
NEW DELHI: India's high profile technology industry is likely to come up with bad news when it announces quarterly results as the Iraq conflict forces corporate buyers to postpone big tech purchases.
Analysts say while markets are upbeat about an early end to the military campaign, domestic software makers may have reasons to worry about the aftermath as consumer confidence is not expected to bounce back in the short term.
A raft of leading software development and services companies will announce their financial numbers for the January-March quarter and the fiscal year 2002-03 over the next couple of weeks.
Infosys Technologies, India's largest listed software exporter, will be the first to announce financial results Thursday. Most analysts and investors look to Infosys' performance as an indicator of the IT industry's health.
"The Iraq war is forcing us to be less optimistic about a possible recovery in the tech industry in the second half of this year," said Neeraj Deewan, an analyst with Quantum Securities.
"The near-term expectation of earnings is definitely negative. The short-term revenue outlook of leading software companies is going to be more important than the financial numbers of the last quarter," Deewan told IANS.
While the official line from the Indian IT companies is still that long-term plans have not been affected due to Iraq war, analysts say if the campaign does not end soon, then firms may have to revise their earlier optimism.
"The Iraq war has created a sense of uncertainty. As a result, businesses across the globe are growing increasingly hesitant to make major capital commitments," said Deewan.
The financial reports of software makers are also likely to reflect the ripples of an acute pneumonia that has hit many countries, mainly in Asia.
Industry observers say the virus, which has caused panic in Hong Kong and China, may deal a blow to Indian tech industry as firms cancel business trips, conferences and product launches.
The disease, known as Severe Acute Respiratory Syndrome (SARS), is threatening businesses around the globe because of travel fears.
India's premier IT industry lobby group expect businesses of software firms to be hit in the short run because of the war on Iraq and the killer pneumonia, but it does not see sales being affected in the long run.
"These are temporary phases," said Som Mittal, chairman of the National Association of Software and Service Companies (Nasscom).
"The immediate impact of the war is that some companies have had to pull out employees from the Middle East. We do not see these factors having a lasting impact unless they prolong and starts affecting the world economy.
"These issues may lead to delays in transaction but customers will come back to us as the Indian IT industry adds value to its business," said Mittal, who is also the CEO of Bangalore-based Digital Globalsoft Ltd.
Few, however, share Mittal's optimism.
"The underlying sluggishness in tech spending by global corporate houses is only likely to intensify as a result of the Iraq war," said an IT industry analyst with credit rating firm ICRA India Ltd.
"There already are reports that major corporate tech buyers are slowing or delaying purchases. This will definitely have an impact on the order book of Indian software companies in the quarters ahead," the analyst added.
The Nasdaq stock exchange-listed Infosys Technologies had earlier projected that its revenues would be between 
9.75 billion and 9.89 billion in the January-March quarter.
In the year to March 31, 2003, the company expects sales to reach as much as 35.92 billion, up from its previous estimate of 34.33-34.67 billion.
In the October-December quarter, the company's earnings grew 24.4 percent over the corresponding period in the previous to touch 2.56 billion on increased outsourcing by overseas clients.
Profit growth of Indian software makers has slipped in the recent past as overseas clients pared orders as a cost cutting exercise in a slowing economy and as new customers demanded sharply lower prices.
Source: IANS
9.75 billion and 9.89 billion in the January-March quarter.
In the year to March 31, 2003, the company expects sales to reach as much as 35.92 billion, up from its previous estimate of 34.33-34.67 billion.
In the October-December quarter, the company's earnings grew 24.4 percent over the corresponding period in the previous to touch 2.56 billion on increased outsourcing by overseas clients.
Profit growth of Indian software makers has slipped in the recent past as overseas clients pared orders as a cost cutting exercise in a slowing economy and as new customers demanded sharply lower prices.
Source: IANS