Reliance Securities: India IT Services Structural Growth Story, Medium-Term Outlook Remain Intact
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Reliance Securities Report
Indian Information Technology-Business Process Management industry, which is $191 U.S. billion in size, enjoys the lion’s share approximately 55% in the global IT outsourcing market. Historical analysis suggests that demand for IT services grows at 1.3 times of Gross Domestic Product and consumption of software as a percentage of GDP is on the rise which is encouraging.
Indian IT companies are likely to continue to gain market share on the back of strong talent base, long-standing customer relationship, proven track record and best-in-class practices. We expect temporary suspension of H-1B visa by the U.S. is likely to have limited impact on Ebit margin of Indian IT companies, as they have already reduced visa dependency and have 50%-60% local workforce currently.
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