HomeCOVID-19 fallout: IT cos see client spends falling 6-9% this year, small and mid caps to hurt more

COVID-19 fallout: IT cos see client spends falling 6-9% this year, small and mid caps to hurt more

Profile image

By Kritika Saxena  April 29, 2020, 11:47:47 AM IST (Published)

COVID-19 fallout: IT cos see client spends falling 6-9% this year, small and mid caps to hurt more
Software services companies are expecting their clients to cut their IT spends by 6-9 percent in the current financial year, according to a dipstick survey of 20 listed IT companies by CNBC-TV18.  Already, clients have started asking for discounts, some by as much as 60 percent, respondents said.


The coronavirus pandemic has resulted in huge losses to many industries globally, and while IT services firms have not been as badly hit as some others like travel and hospitality, it will feel the effects of a severe slowdown in many segments of the global economy.

Industry officials who participated in the survey said they expected a recovery in spending only next year, i.e 2021-22.

IT companies are expecting their revenues to fall between 5-7 percent, and a 3-4 percentage point decline in operating margins in the current quarter. The impact on margins, survey partcipants said, could be worse than what they had experienced during the global financial crisis. They see growth returning gradually over the next eight quarters.

The impact of lower client spending is expected to hurt smaller companies more than the larger companies. Also, larger IT companies may try to increase market share by offering better deals to clients, making matters more difficult for small and mid-sized IT companies.

Also read: Only 25% of TCS employees will be working out of office post-COVID
Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!