The Indian IT sector makes billions of dollars yearly, a big part of the global economy. But, like every other industry, it is affected by downturns in the world economy. Indian IT companies make up a big part of the IT market worldwide, and the growth of the Indian IT industry is closely tied to the growth of the IT market worldwide.

Indian IT companies make most of their money from the American and European markets, and the growth of the IT industry depends a lot on how well the consumer and banking sectors do. Keep reading this information to learn about recession in IT sector India like – recession in IT, impact of recession, effects of recession and so on.

The 2022 Global IT Market

In the field of information technology, the year 2022 was marked by significant losses for the industry’s most prominent corporations, who saw their market value decrease by trillions of dollars. This downturn was attributed to various factors, including the disruption caused by the Covid-19 pandemic, Russia’s invasion of Ukraine, and rising inflation leading to increased interest rates, all of which caused investor concerns. Additionally, this downturn was attributed to the fact that investors lost money.

Several industries, including semiconductors, social media, and cloud computing, saw their future estimates reduced, reported weak growth, and witnessed a decline in stock values due to the effects of global recession. By October, the aggregate market value of seven of the most important technology companies in the world, including Facebook, Apple, Amazon, Netflix, Google, and Tesla, had dropped by more than $3 trillion. There was a loss of approximately $700 billion for both Google and Microsoft and $600 billion for Facebook, now known as Meta.

The situation became even more precarious when Amazon became the first publicly traded corporation overall and not only in the technology industry to suffer a drop in market value of one trillion dollars. According to a report published by Bloomberg on November 12, the market value of Amazon had reduced from $1.88 trillion to $879 billion, and the market value of Microsoft had also decreased to $889 billion.

Now you know what causes a recession and reasons for recession, let’s move forward.

Layoffs

Technological businesses across a wide range of industries have been swiftly laying off staff at a rate comparable to that observed in 2020 during the early impact of the Covid-19 epidemic on the economy of the world. The faltering technology sector is anticipated to have eliminated more than 150,000 jobs by 2022. This covers huge corporations, such as Facebook’s parent firm Meta Platforms, and smaller enterprises in the United States and other nations.

In November, Meta Platforms said it would cut more than 11,000 employees. Amazon may eliminate roughly 18,000 positions. Companies providing information technology services in India make up a significant portion of the workforce in the organized sector; hence, changes in the state of the global economy will likely impact these organizations’ growth prospects. Layoffs in Indian start-ups were also on the rise, with Inc42 reporting that more than 15,700 people were let go in 2022 due to the increasingly competitive conditions for obtaining finance. Learn the most in-demand Data Analytics Skills from Industry experts at Data Analytics Course in Pune, do check out now!

The Future of Indian IT

We expect that the year 2023 will be split into three parts. During the first few months, people will continue to move from the normal before the pandemic to the new normal set by the pandemic. Like most changes, this one will likely come with some problems in the form of a recession. But the downturn is likely short and mild, paving the way for the economy to improve.

Infosys Ltd.’s financial results for the third quarter of 2023 were very good, so it raised its revenue forecast to 16-16.5%. The company is having trouble in some areas, like mortgage and investment banking, retail and high-tech, and in Europe and other places. But the company is growing in other areas, such as manufacturing, energy, and utilities.

TCS also reported 19% year-on-year growth in revenue in the third quarter of 2023, as well as a 50bp quarter-on-quarter growth in the EBITDA margin. This shows that the company is still growing and can pass on higher customer costs. But Fitch thinks that TCS’s growth in sales will slow to 11–12% in the next fiscal year.

Even though tech companies have been putting up good numbers and are still confident in their projections, we are still worried about a possible slowdown in demand worldwide. In this situation, the IT recession in India might be a safer bet, but we have to wait for a turnaround in IT, which could take more than a quarter. Because of this, we would be careful with this sector.

The Durability Of The IT Industry

The Indian IT industry is known for being able to get back on its feet and change with the times. Many businesses have changed their plans and focused on cost-effective solutions to stay competitive. The Indian IT industry is strong for several reasons, one of which is that India has many highly skilled, English-speaking professionals. This makes India a good place to outsource IT services.

The IT industry in India has also been helped by the government, which has set up software technology parks. India’s business sector is also strong because it is cheap to do business there. Also, Indian IT companies have added new services and moved into new markets, which helps them deal with slowdowns in certain areas. So if we talk about a global recession 2023, it wouldn’t hurt the IT industry. Do check 3RI Technologies for more Job Oriented Courses with Placement Assistance.

The Bottom Line

Due to the Indian information technology industry’s significant reliance on international markets and economic expansion, growth may moderate over the next few quarters; however, the Indian information technology industry has already demonstrated that it can survive and thrive even in adverse economic conditions.