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The H1-B visa programme gets rapped in India because it’s presumed to be causing a “brain drain”. Source: Flickr/Phil Whitehouse

Brexit could spell trouble for India’s IT industry after disappointing growth figures

Brexit may dent the growth of Indian IT companies in a year that has already seen one of the worst first quarters in a decade.

The National Association of Software and Services’ (Nasscom) industry growth target of 10-12% for the coming financial year was issued in February before the impact of Britain’s vote to leave the European Union in late June could be taken into account.

Industry sources had already predicted that Brexit could have a negative impact on the IT sector, but the development comes on the back of the most disappointing first-quarter growth figures in a decade from India’s three largest IT companies Tata Consultancy Services, Infosys and Wipro.

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“Growth was lower than expected for them in what is a seasonally strong quarter and this is before Brexit has even hit. This means the outlook for FY17 has to be relooked at. I don’t think any of these companies are likely to cross 10% in growth in this fiscal,” Sagar Rastogi, analyst with Ambit Capital, told The Economic Times.

Nasscom’s senior-vice president Sangeeta Gupta told the Economic Times they were still confident in the guidance, barring any major upsets due to the fallout from Brexit.

But as noted by Quartz India, Europe is the IT outsourcing industry’s second biggest market and most companies use European headquarter in the UK as a gateway to the EU.

Speaking the day after Brexit, former CEO and managing director of Infosys, S. Gopalakrishnan, said the result was likely to be negative for the sector in the short to medium term, according to Business Standard.