65% jump in IT investments last fiscal, but Covid may hit growth in Punjab this year
CHANDIGARH: Before the coronavirus pandemic led to a nationwide lockdown and brought business activity to a grinding halt two months ago, Punjab saw a 65% jump in investments in the information technology (IT) and IT-enabled services (ITeS) in the financial year 2019-20.
The state received investments worth Rs 605 crore in the sector in the year gone by as compared to Rs 365 crore during 2018-19. Sweden-based Target EveryOne IT Private Limited, Aeren IT Solutions, Vertex Infosoft Solutions, Mark Software Systems, Entella Private Limited, Miran Informatics and EON Infotech are among the firms, including some start-ups, that have set up their software development units and IT services facilities in the state.
BULK OF INVESTMENT MADE IN MOHALI
Invest Punjab chief executive officer Rajat Agarwal said the bulk of the fresh investment, which is estimated to generate 4,600 additional jobs for IT professionals, has been made in the Sahibzada Ajit Singh Nagar district (earlier known as Mohali). “Aggressive policy advocacy and proactive follow up with the investors helped. Also, special incentives have been given over and above the non-thrust sectors to IT, ITeS, and Electronics System Design and Manufacturing (ESDM) industry to promote this sector,” he said.
While several of these IT companies have already started their operations, others are expected
to come on stream soon. The investments in the IT sector have grown 400% in the past two years, going up from Rs 121.49 crore in 2017-18 to Rs 605 crore last year. Though the IT sector, particularly software service providers, has shown tremendous resilience in the wake of the Covid-19 outbreak, the outlook for growth and investments in the current year does not appear to be encouraging.
SECTOR STARING AT DECADAL LOW: CRISIL
Crisil, a domestic rating agency, recently said the sector is staring at revenue growth sliding to a decadal low of up to 2% and narrowing margins due to the global pandemic. “The companies will lose out on new deals which will compromise future revenues,” the agency said in a report.
An IT solutions firm based out of SAS Nagar, which also has operations in the USA and Europe, is already feeling the impact as its negotiations that were at an advanced stage with two big prospective overseas clients have gone into cold storage now.
IT sector experts say there are many variables because no one
knows for how long the lockdown will continue. “Then, things will also depend on the global scenario, how overseas clients are doing, and the cash flow situation,” they say. A large number of customers of IT services companies in the state are in the USA and Europe, which are among the most-affected regions.
However, these companies, particularly the software service providers, have made a quick transition to remote working to serve their existing clients that include some of the biggest names in the airline, banking, insurance, and other businesses.
Software Technology Parks of India (STPI), Mohali, additional director Ajay Prasad Shrivastava said there has not been much impact on IT and ITeS sector in the region so far because the companies were quick to adapt to work from home to curtail the spread of coronavirus.
“Also, there are not many hardware companies in the region. But how things pan out from here for different IT services firms will depend on the sectors in which they operate,” he said.