{"id":125798,"date":"2021-04-10T12:10:35","date_gmt":"2021-04-10T07:10:35","guid":{"rendered":"https:\/\/world.einnews.com\/article\/538379912"},"modified":"2021-04-10T12:10:35","modified_gmt":"2021-04-10T07:10:35","slug":"analysts-cautious-as-saas-deal-activity-decelerates-in-india","status":"publish","type":"post","link":"https:\/\/www.technologyforyou.org\/analysts-cautious-as-saas-deal-activity-decelerates-in-india\/","title":{"rendered":"Analysts cautious as SaaS deal activity decelerates in India"},"content":{"rendered":"
<\/div>\n

Bengaluru:<\/strong> A sequential deceleration in SaaS deal activity over the past two quarters has prompted sectoral analysts to question the bullish outlook on cloud-based digital deals<\/a>.<\/p>\n

According to the March 2021 ISG Index, growth of as-a-service annual contract value (ACV) fell from 26% year-of-year in the December quarter to 15% year-in-year in the March quarter. This was due to the sharp slowdown in infrastructure-as-a-service ACV in key markets such as the US, and Europe, Middle East and Africa (EMEA).
\n<\/p>\n

\n
\n
\n

Liking this story?<\/p>\n

Get one mail covering top tech news of the day in under 5 minutes!<\/p>\n<\/div>\n

Please wait…<\/p>\n<\/div>\n<\/div>\n

It suggests decelerating deal activity, \u2019 Research Analyst Sudheer Guntupalli<\/a> said in a report. \u201cIT companies will see higher growth until June 2021 because of the sharp fall in business in June last year. The real numbers will be visible from September 2021.\u201d<\/p>\n

\u201cWe understand that as the base catches up, it is normal for growth rates to decelerate. However, it is key to note that even on an absolute basis, As-A-Service ACV run rate did not change much from pre-pandemic levels (March 20),\u201d Guntupalli said. \u201cThis is disappointing, given the lofty counter-cyclical expectations, such as pandemic-led acceleration in cloud migrations, and the much-needed optionality of variabalising fixed costs provided by cloud.\u201d\n<\/p>\n

Last month, analysts said there was a \u201csignificant modernisation movement\u201d, with firms planning to move large portions of their legacy operations into the cloud. Tier-I companies have also struck several mega deals involving cloud services and digital transformation of client operations.\n<\/p>\n

While ISG has indicated that deal renewal or restructuring activity is healthy, scope for new deals is limited, Guntupalli said. This means that when the recovery from the pandemic is complete, Indian IT companies<\/a> may not see higher acceleration.
\n<\/p>\n

ICICI Securities wrote that the current deal activity was primarily driven by renewals and restructuring rather than completely new contracts.<\/p>\n

\u201cSome of the mega deals entered into by the industry in the recent past seemingly have a higher share of managed services component (and therefore), margin headwinds are to be watched out. In conjunction with the sharp and quick run-up in multiples (up to 70% vs pre-Covid-19), we maintain our anti-consensus cautious stance on the sector.\u201d\n<\/p>\n

In the near term, elevated negative news flow around a second Covid-19 wave in India and rupee depreciation should translate into relative investor interest in the sector, according to Guntupalli.
\n<\/p>\n

Source Link<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Bengaluru: A sequential deceleration in SaaS deal activity over the past two quarters has prompted sectoral analysts to question the bullish outlook on cloud-based digital deals. According to the March 2021 ISG Index, growth of as-a-service annual contract value (ACV) fell from 26% year-of-year in the December quarter to 15% year-in-year in the March quarter. […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[19158],"tags":[],"class_list":{"0":"post-125798","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-technology-press-releases"},"_links":{"self":[{"href":"https:\/\/www.technologyforyou.org\/wp-json\/wp\/v2\/posts\/125798","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.technologyforyou.org\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.technologyforyou.org\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.technologyforyou.org\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.technologyforyou.org\/wp-json\/wp\/v2\/comments?post=125798"}],"version-history":[{"count":0,"href":"https:\/\/www.technologyforyou.org\/wp-json\/wp\/v2\/posts\/125798\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.technologyforyou.org\/wp-json\/wp\/v2\/media?parent=125798"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.technologyforyou.org\/wp-json\/wp\/v2\/categories?post=125798"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.technologyforyou.org\/wp-json\/wp\/v2\/tags?post=125798"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}