Will global recession impact India or not?

'Inflation' is the one buzzword in the financial world in 2022. We experienced inflation rising so fast this year that it has in more than the past four decades. I think the combination of the two significant factors, which includes increasing prices and rising interest rates, has been a bigger curse for consumers, as costs are rising for everything — from necessities to loans.

Unfortunately, after two years of huge profits and fascinating salary hikes, Indian IT companies are cautiously treading on a path where salaries may drop, and the companies may witness a decline in demand. The IT companies rely predominantly on the US and European markets, contributing to 80-90 per cent of their revenues.

However, the past two years saw a rapid shift towards digitalistion due to the pandemic, which was a boon for the Indian IT sector. Now, with talks of recession in the US and Europe gaining momentum, these IT companies are already under stress. The FY23 earnings guidance of these companies reflects the strain due to the economic slowdown in the US and Europe.

Indian IT companies source a substantial share of their revenue from the US and Europe. Both these geographies face considerable pressures in the form of a slowdown in GDP growth and one of the highest inflationary pressures in recent times. However, I am pretty sure that after clocking 19 per cent revenue growth in FY22, the Indian IT sector is headed for two years of moderation.

- Ash Mufareh, Founder & CEO, ONPASSIVE