How American recession hits the Indian IT?

The news that there is a risk of economic recession in America this year is worrying the world. US GDP has declined for two consecutive quarters this year. US GDP shrank by 1.6 percent in the first quarter of this fiscal year. The second quarter results are due this weekend. According to the available statistics, the GDP is likely to decrease this time as well. When reporters questioned American President Biden on this issue, he concluded that there is no possibility of an economic recession. But the reality is far away from his words.

Experts are worried that if there is an economic recession in America, the impact will be heavy on Indian tech companies. But our tech giants are of the opinion that there is no possibility of economic recession in America. For example, Infosys expects its revenue to grow by 14-16%. Economic experts say that the statistics are not so promising. Another tech giant Wipro also faces a similar situation. The company's EBIT (earnings before interest and taxes-earnings before interest and taxes) margin fell to Q2 2018 levels. HCL Technologies' EBIT margin also declined to 17 percent. Tata Consultancy Services' EBIT margin declined by 2.4 percentage points in the quarter compared to the first quarter of 2021. It is a known fact that Indian IT giants depend on the US market for around 40% of their revenues.

In the first two months of this financial year, India exported to America worth 14.3 billion dollars. This is 18.2% of our total exports. Farida Group, the country's largest exporter of leather and leather footwear, has said that import orders from America have decreased significantly for the next summer and winter seasons. 45-50% of the group's business is done in the US. Exporters of ready-made garments are also reporting a huge drop in orders. Leading research firm Nomura also predicted last month that the economic recession in America will have an impact on India. IMF slashes India’s 2022 growth forecast to 7.4%.