Ample growth opportunities for all IT services companies from a longer-term perspective: Sumit Pokharna

economictimes.indiatimes.com:

«My only fear is that even if the client spend higher on IT budgets, but if that translates into higher insourcing budget or it translates to higher spending on the hyperscalers, then orders may not come to Indian IT services,» says Sumit Pokharna, VP Analyst, Kotak Securities.

The underperformance in the IT pack has already played for a while right now while the rest of the market has been booming and we are sitting at all-time high pretty much across the board, barring of course a few stocks here and there. If you were to do a SWOT analysis of the IT sector right now, will you think that what is going to weigh heavy right now are the weaknesses and not the strengths in favour of IT?
TCV has been very strong and that is a very positive side. But if you look at the earnings or the revenue side of it, that is not converting into revenue. Why is it so? Because there are some slippages or there are some postponement of existing order book.

So, you have won certain orders but that is not converting into revenue, so that is the challenge here. And I will divide the sector outlook into two parts currently. In the short term as he has rightly mentioned that there are a lot of uncertainty regarding the macros, particularly Fed interest rate cutting plus other where new technology is in place which one to opt for, so that is delaying the decision making at the customer's end.

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