Global enterprises may turn positive on technology spending with signs of improvement in macro-economic indicators, according to BNP Paribas India.
The comment comes in the backdrop of IT service providers remaining uncertain about the macro-economic outlook with constrained discretionary demand.
‘’The industry seems to have bottomed out,” observed Kumar Rakesh, IT and Auto Analyst at BNP Paribas India, the Indian arm of the Paris-based financial services firm. “There are signs of improvement in the global economy. The macro indicators and strong deal wins in recent quarters should translate into revenue-growth acceleration in FY25, in our view.”
The firm further said, according to investors and analysts, the U.S. economy is heading into a Goldilocks phase. “It is a consensus view, as reflected in upgrades in the U.S. real GDP forecasts. Our equity strategists and bank analysts argue that over the next 3-4 months, the catalysts of PMI are rising, benign inflation prints resuming and central banks finally cutting rates mid-year should allow for a continuation of the Goldilocks phase,’‘ he observed.
He forecasts that this scenario may turn enterprise sentiment positive for tech spending and bridge the gap between expectations. The U.S. IIP (index of industrial production) and job postings by IT Services firms, both having a high correlation with India IT services firms’ revenue growth, are showing signs of inflection, as per BNP Paribas.
“We think FY25 guidance will be a critical near-term catalyst, along with U.S. macro-economic indicators in the coming months,’‘ Mr. Rakesh added.
