IT Sector Of India Set To Hit Slow Lane

As we approach the New Year, despite recessionary fears, consumer spending is still going strong. Hotels, resorts, airlines, and retail stores operate optimally.

In a hyperinflationary environment, such contrasting indicators baffle economists. Though there is a likelihood of a slowdown, it is uncertain to what extent sectoral indicators will be impacted.

SaaS firms that had a dream run in the last 2 years seem to be losing steam. While product companies are facing a demand slowdown, the Indian IT services industry is yet to face much slowdown. Also, the tech industry globally is showing the strain. With mass layoffs announced by Google, Microsoft, Meta, and Twitter, projections for the next year remain subdued.

Though, one thing is very clear 2023 will be a year where the demand levels will be nearer to the pre-pandemic years.

Until now, India as an economy has been impacted less than its western counterparts. Inflationary pressures are also far lesser than in other nations. However, IT exports may face headwinds next year as over half of India's income come from the US, and another 20-30 % comes from Europe.