The new coronavirus pandemic has stalled the global economy and most businesses are feeling the impact. India's information technology firms are expected to see a disruption, given that software services providers generate most of their business overseas and the bulk of it comes from clients in financial services, manufacturing and communications sectors.
The NSE's Indian IT index, the benchmark for the sector, has tumbled 35 percent from its peak because of the coronavirus outbreak. The last time the index saw a steeper drop was during the global financial crisis in 2008 when it plunged 58 percent.
Here's a look at how India's four largest IT companies were doing then and now.
Revenue grew at an annualised rate of more than 30 percent in three years prior to the sub-prime crisis of 2008. While the growth slowed after that, it was better than the pace at which the IT companies have grown in the last three financial years.
To be sure, the sector has seen a transition from outsourcing to digital services and consulting in the past few years.
Operating profitability has remained stable for most companies.
Valuations, measured by the price-to-earnings multiple, have cooled on both occasions.
After the 2008 rout, the MSCI India index saw a rise in the weight of information technology stocks by the end of the year following the crisis. Foreign funds tracking the MSCI Index increased their holdings of domestic software service providers. And the sector's weight on MSCI Index has remained higher than in the Nifty 50 index.
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