Finally reality sets in – Indian IT firms’ starts losing earning power
Babu Ghanta
Apr. 22, 2005

For a long time in India Daily we were telling you about the problems of Indian IT sectors. Finally reality has started setting into the financials of the IT firms in India. These companies used the miracle of deflation to drive jobs out of the Western countries into India. Now they face the same deflation in software industry making them helpless in the revenue fronts.

IT sector scrips like Infosys, Satyam, Wipro and Polaris have been declining on an average between 0.83 per cent and 9.97 per cent going into earnings reporting season. The BSE IT index, barometer of the technology sector scrips, underperformed the Sensex during January 3, 2005 till March 8, 2005. The BSE Sensex rose 3.53 per cent during this period from 6679.20 to a peak of 6915.09 but the BSE IT index rose only 3.22 per cent from 2654.22 to 2739.63. Since the peak hit on March 8, the BSE IT index has fallen 4.39 per cent to 2619.39 on April 8. Part of this fall is explained by the fall in the markets as a whole with the BSE Sensex falling 6.30 per cent to 6479.54. But there are certain other factors such as a strengthening rupee, increased competition and shrinking business in the US, which are responsible for the decline over the past month. Little wonder that leading and second rung IT scrips alike have fallen significantly in the month till April 8. Polaris software is one of the biggest losers falling a huge 9.97 per cent during the month from Rs. 131.45 to Rs. 118.35.

The most significant disappointment was from TCS – the golden goose of “body shopping.” Now it faces serious global challenges from allover the world.

Finally reality sets in – Indian IT firms’ starts losing earning power
Babu Ghanta
For a long time in India Daily we were telling you about the problems of Indian IT sectors.
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