India Market Watch: Fewer IT Jobs Created, India’s Realty Sector Leads Emerging Markets

July 24, 2017 Posted by India Briefing Reading Time: 4 minutes

NASSCOM forecasts decline in new IT jobs

In a sign of the troubling times in India’s information technology (IT) sector, industry body National Association of Software and Services Companies (NASSCOM) has forecasted a major decline in new jobs created over the current fiscal year ending March 31, 2018. According to NASSCOM’s estimates, the IT sector will create 20 to 38 percent fewer new jobs in the fiscal year (FY) 2017-18 as compared to FY 2016-17.

What this means in numbers is that the sector will potentially create between 130,000 to 150,000 new jobs in FY 2017-18, including both through lateral recruitment and campus placement. Jobs generated in the previous fiscal year stood at 180,000 – in stark contrast to the generation of 240,000 jobs a year, during the industry’s heyday in the 2000s.

Presently, India’s IT sector is facing several structural challenges: automation, job cuts and reskilling needs, changing digital requirements of clients, and protectionist hiring rules in Western countries, which have cumulatively reduced scope for job growth in India while increasing overall operation costs in the near term.

India leads emerging markets with its realty sector boom

India’s real estate sector seems to have found favor with foreign investors as 2017 saw the most inflows into the sector – amounting to US$2.49 billion (Rs 160 billion) in the first six months – than ever witnessed during the same period in previous years. Moreover, foreign investments jumped from US$3.2 billion in 2011-13 to US$7.6 billion in 2014-16 – a staggering surge of 137 percent. This makes India’s performance the best among the world’s emerging markets.

Factors responsible for this energetic momentum in the country’s realty sector could be: the government’s targeted policies in infrastructure, regulatory reforms, economic and political stability, and liberalization of FDI rules, which have positively shaped investor sentiments.

Industry experts point to the introduction of the Goods and Services Tax, Real Estate (Regulation and Development) Act, Real Estate Investment Trusts, Benami Transaction (Prohibition) Amendment Act, and the government’s focus on affordable housing (Housing for All), which have cumulatively resulted in greater transparency in and consolidation of the sector over the last two years.

Fashion, lifestyle retail sees drop in sales

Fashion and lifestyle retail seem to have taken a hit this month in India as brands have been unable to attract footfall despite offering eye-popping discounts.

While the GST roll-out from July 1 carved out discount periods for certain retail segments prior to the traditional July – August sales season, seasoned shoppers were also keen to advance their purchasing to prior to July 1. For instance, under the GST regime, tax incidence has climbed from 5 percent to 12 percent on branded garments that cost more than US$16 (Rs 1000).

Meanwhile, fashion and lifestyle brands are offering discounts upwards of 40 to 50 percent, and state that no immediate price increase will be implemented after GST.

Since demonetization over last November, India has been witnessing the most extended shopping sales seasons across all platforms – traditional and e-commerce, indicative of some stress in the sector.

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