The COVID-19 pandemic has sent the global economy into a freefall, with some countries suffering more than others. India, in particular, has been hit hard by the coronavirus, and it didn’t help that its economy was already slowing before the pandemic. Growth in the nation’s economy slowed to 4.7% in the quarter that ended December 2019—its weakest pace in more than six years.
And when India, which has the third largest economy in Asia, went into lockdown due to COVID, Goldman Sachs predicted a 45% economic decline in the three months between April to June, while ratings agency Moody’s cut India’s credit ratings to the lowest investment grade level. In addition, the International Monetary Fund has predicted that India will be the largest economy to suffer the most due the COVID-19 pandemic.
Of course, investments have fallen across multiple sectors since the virus emerged. One of the country’s hardest hit markets has been Information Technology. In 2019, overall IT spending, including hardware, software, and IT services, recorded more than 9% growth. This year, IT advisory IDC has estimated that domestic IT spending in India will decline 4.5% to $55.5 billion.
Earlier this year, it was also predicted that India’s IT services companies would see a significant slowdown in growth during the financial year, with top software exporters – Tata Consultancy Services, Infosys, and HCL Technologies impacted by the reduced technology spending by clients in the US and Europe following lockdowns across the globe. However, government agencies and enterprises are still investing in software and IT services, allowing that market to remain stable during this difficult time. SirionLabs, a software-as-a-service (SaaS) provider, was able to secure $44 million in May as part of its Series C round led by Tiger Global and Avatar Growth Capital.
"Spending in software IT services is still stable and will see tepid growth compared with last year. Software growth is so far driven by security applications, automation tools, collaboration tools etc. On the IT services front, we have not seen a major impact as of now," Shweta Baidya, senior research manager, IDC India, said.