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Indian IT services firms see no big blowback from Brexit

The UK government last Thursday clinched a last-minute deal with the EU to exit.

, ET Bureau|
Oct 21, 2019, 08.14 AM IST
The IT services sector is, however, a little cautious about delays in decision making.
Indian IT services providers are unlikely to be negatively impacted by Britain’s decision to leave the European Union, commonly referred to as Brexit, as they are seeing steady growth in the UK and European markets.

“It is unlikely to have a negative impact on Indian tech because the UK will want to create new partnerships,” said Sangeeta Gupta, senior vice-president, Nasscom, the IT services industry lobby.

Some of the large IT services companies have seen faster growth in the UK and Europe than from their traditional US market in the past four-five quarters.

Companies expect business to be as usual, and some regions in Europe and the UK are still picking up outsourcing of technology services, said Kuldeep Koul, lead analyst at ICICI Securities.

The UK government last Thursday clinched a last-minute deal with the European Union to exit. But the Boris Johnson-led British government has to get Parliament approval for the same, for which it has reportedly sought an extension till October 31.

Large tech services firms are keenly watching the situation, but companies such as WNS seem confident about their deal pipeline and automation-focused projects in the region. “Whilst for some, exposure to the UK economy looks like a risk to the business, WNS’s management is adamant that the UK pipeline remains very strong with clients firmly committed to existing plans,” Tech Market Review wrote in a report.

“Perhaps, we shouldn’t be surprised, indeed, many of WNS’s services are of course counter cyclical – not just traditional BPO cost-cutting but automation and procurement services are all very attractive in environments when “pennies have to be counted” and efficiencies gained," it said. The report also pointed out that, "WNS must continue to push on its automation drive but remains a business in good shape with strong visibility to double-digit organic growth.”

The IT services sector is, however, a little cautious about delays in decision making.

“...there will be some industry or companies who do not know whether there’s going to be a deal or no-deal Brexit, so they do not know what will happen to their market. So, they may have taken a pause on some discretionary expenses; then there is going to be some impact,” said Koul of ICICI Securities.

Gupta of Nasscom said that "the uncertainty and how it prolonging is what would be worrisome".

As per Gupta, business is now continuing for IT firms, but faster decisions would help the sector focus. For example, she said, some banks, which are clients of IT firms, may have to shift headquarters from the UK to Europe or vice versa, post-Brexit.

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Hard Brexit an opportunity to Indian IT companies: Expert

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