IT revenue forecasts offer no clarity

Traditionally, revenue guidance gives a broad direction of where the industry is headed. But FY20 estimates by four large IT firms in India are so disparate that they have left market watchers clueless about the coming quarters. The country’s largest software services exporter TCS gave a healthy projection of 26-28 per cent, but Wipro stood at the opposite end, expecting a flat or even de-growth of 1 per cent for this quarter. These forecasts may be poles apart, but all agree on one thing: they are no longer covered in glory.

Cognizant, which announced its results on Friday, has only deepened the belief that uncertainty lurks ahead. It not only missed first-quarter estimates, but also halved its FY20 guidance to 3.6-5.1 per cent in constant currency terms as against its own estimate of 7-9 per cent earlier. This was reason enough for traders — already miffed with large cap IT firms — to pull the plug. Subsequently, IT stocks including Infosys and TCS came under pressure on the bourses on Friday.