The report cards of large software firms paint a grim picture of the year ahead, making analysts doubt Nasscom's 11-14% growth forecast. 
Their fears are not exaggerated, considering that the global economy has become much more challenging with the political crisis in the eurozone. 
The top lines of IT companies will come under pressure if the crisis impacts the US in a big way. North America alone accounts for over half of the sector's revenues. Revenues of the top four IT firms grew by a mere 1.2%, the slowest since the last quarter of fiscal 2009. 

This was mainly due to a slowdown in spending by banking and financial services firms and telecom companies that account for a little less than half the sector's revenues. A lot more caution has also set in after Cognizant lowered its revenue guidance for 2013. 

Analysts say the fourth-quarter earnings are reminiscent of the financial crisis in 2008. However, Indian IT companies weathered the financial crisis that froze IT budgets in their traditional markets. So, there is no reason for panic, but companies need to revisit their business models to reduce risks. 

Companies must look beyond traditional markets and traditional lines of business, that is, the US and financial services. They should innovate, integrate consulting, business intelligence and knowledge services. 

They must also leverage the demand for domestic IT services that has started looking up, with large e-governance initiatives by the Centre and states. 

A recent report by Gartner estimates the Indian IT infrastructure market at over $2.5 billion in 2013. Its principal research analyst says the gradual adoption of cloud computing will change the way Indian enterprises use IT, big ones as well as small ones. 

Big IT players that have built up scale and have balance-sheet strength should go for acquisitions when organic growth is slowing down. Finally, India's core IT strength is its high-quality manpower and lower cost of delivery. 

So, the debate is not actually about offshoring but about IT spending. Once spending takes off, Indian IT firms would be back in business.