Mumbai / Bangalore: The recent spurt of deals may have spurred optimism within the software industry about revenue growth, but experts believe it will be a while before revenue realisations of tech companies improves.
Nasscom president Som Mittal told DNA Money that, even though companies were winning deals, their receivables were still under pressure. "I am currently travelling in the US and Europe and there are positive notes everywhere. If you ask whether business deals are happening, the answer is yes. But revenue? (realisation) Perhaps (the answer is) no, because budgets are still tight. The optimism you hear from service providers is because of deals going through. But, on the ground, revenue realisation is still a worry," he said.
This is reason, he said, Nasscom revised upwards its growth estimates of 4-7 per cent for the IT-ITeS sector in the current year despite analysts forecasting improvement in revenues.
"We still have to wait for a quarter or more for any revision", he said.
Jai Durgam, senior director - global technical service - of Synopsis (India) EDA Software Pvt Ltd, also confirmed that customers were still not loosening purse strings.
"There are very selective purchases happening but they (IT customers) are not going on a purchasing spree," he said.
Shalabh Garg, director - advisory services and supplier relations - of NeoIT, says there is a lag of at least one to three months in the realisation of revenue.
"The signing of an outsourcing deal is followed by client and provider transition phase, which then leads to stability. These phases may take more than seven to eight weeks and that cause the lag," he said.
Garg prefers to view the current stabilisation in the environment as end of pessimism in the market rather than beginning of optimism. He said deals were happening but many of them were due to vendor consolidation.
And he said such deals are likely to impact revenue realisation adversely.
"In case of vendor consolidation kind of deals the service providers have started working on extremely competitive prices. The margins are thus under pressure for the service providers. We have seen many global service providers bidding at lower rates than Indian IT service firms," said the NeoIT executive.


