IT Cos Hold-Up Budgets Amid Uncertainty In US

Steps such as tariff imposition are going to increase the uncertainty. Globally, growth rate has slowed down and it may further impact the global growth rate. And when there is uncertainty, enterprises will not invest- be it in the US or Europe - V Balakrishnan, co-founder and Chairman, Exfinity Venture Partners, and former CFO of Infosys, tells Bizz Buzz

Bengaluru: Global enterprises are following a wait and watch approach before finalising their IT spending budgets for the current year after Trump administration’s executive orders on imposition of tariffs on various products.

According to industry experts, the impact of reciprocal tariffs by the US on countries exporting products to the North American nations remains unclear. Such a lack of clarity is forcing enterprises to finalise their technology budgets for this year. Notably, January-March is the period in which companies finalise their annual IT budgets.

“Steps such as tariff imposition are going to increase the uncertainty. Globally, growth rate has slowed down and it may further impact the global growth rate. And when there is uncertainty, enterprises will not invest- be it in the US or Europe. So, IT firms are expected to focus on growth in the short-term,” V Balakrishnan, co-founder and Chairman of Exfinity Venture Partners, and former CFO of Infosys, told Bizz Buzz.

He also said that Trump administration’s moves on H-1B visa might be the next in coming days. Signing an executive order, the US President, Doland Trump last week had said that the country would impose 100 per cent reciprocal tariff on all those nations which has high tariff rate on US Goods.

“I will charge a reciprocal tariff. Any country that charges the US a tariff will receive tariffs of the same amount. No more or less. In other words, if they charge us tax or tariffs, we will charge them the exact same tax or tariffs. Very simple,” Trump told reporters after signing the order.

Countries like India, Thailand, China, European countries, Brazil and many others are expected to be adversely impacted due to such tariff imposition. Investment firms have also pointed out that such tariff war would raise prices of goods for average American consumers and may put the country in an inflationary environment again. Given the fact that America’s import bill last year stood at $4.1 trillion, any tariff war doesn’t augur well for global enterprises.

“The detailed order on reciprocal tariff is likely to be announced soon, when things will be clear which industries will be impacted the most. So, companies will evaluate the likely impact of such rules and then finalise their technology budgets. Especially, long-term projects are likely to be put on hold till clarity emerges,” said an industry source.