Q2 Results Analysis: More Pain In Store For IT Firms In 2020, Say Experts

Slowdown signs are evident, though subtle, in the results of the two IT majors. Though Q2 results of Infosys and TCS can be described as a case of contrasts with the former outperforming the latter, the slowdown in consumer-facing sectors such as BFSI and retail has rattled the IT bellwethers, say experts.

Sanchit Vir Gogia, founder, Greyhound Research, a technology advisory firm, said: “This situation is not great. There is a sense of scare.”

Gogia pointed out that while the IT sector might do well due to festive season till December end, the fourth quarter will especially be challenging.

“The real challenge will start in 2020, when we will see how much investments goes where especially in consumer facing industries like BFSI and retail,” he added.

BFSI has been a cause for concern for the IT majors as large banks in Europe are cautious about investing. There has been softness in the US capital markets as well. Retail as both IT majors pointed, has not picked up and there is not enough visibility yet.

“But it is all dependent on the US economy at a very large level. We will have to wait for the next six months for more clarity to set in,” Gogia added.

The US is the largest revenue generator for IT firms and any macro-economic volatility in the continent will affect the business. There are uncertainties due to Brexit in the Europe, which is also effecting the business prospects for the firms.

[Moneycontrol]


Analyst:

Sanchit Vir Gogia: Sanchit is the Chief Analyst, Founder & CEO of Greyhound Research, a Global, Award-Winning, Technology & Innovation Research & Advisory firm. To read more about him, click here.

Have a question on this or other Technology & Innovation topics? Click here to set up an enquiry call with Sanchit Vir Gogia.


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