As North America gains traction, IT companies note softness in Europe
Europe was a bright spot for the Indian IT industry's growth when its chips were down. But as North America has started gaining traction for the IT services industry, the other side of the pond has begun to show signs of softness for many of the top IT companies.
Experts also say Europe is facing a decelerating economy which is unlikely to improve in the near future and, hence, clients are pulling back hard on discretionary spends and looking to delay large projects.
While IT leaders' commentaries on Europe didn't reflect on their Q2 numbers, analysts say they are largely reflective of deal pipelines and will show in coming quarters. Infosys in its Q2 earnings call said that in Europe, the automotive sector was challenged recently while discretionary spend remains under pressure.
Similarly, C Vijayakumar, chief executive at HCLTech, said in the company's earnings call that there is pressure in automotive, especially in Europe. «And that is definitely reflected in our numbers this quarter as well. Some of it would be reflecting in the next quarter as well.»
In the case of Wipro, Europe registered a sequential decline of 0.1% due to overall weak demand and client-specific issues in a few accounts.
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