The apex association for software and services companies Nasscom, has painted a rather gloomy picture of the Indian IT industry by not only revising job addition targets downwards but also suggesting that pay hikes would be moderate for the next 24 months.

Nasscom President Ganesh Natarajan said that IT companies may have to adopt a wait-and-watch approach for as many much as 12 to 15 months which means that as against the target of generating 2.7 lakh jobs, the actual number may be close to two lakh.

He further added that pay hikes could be in the rate of 8 to 10 per cent for the next couple of years as against the hikes in excess of 15 per cent that IT employees received in the past.

Exports from the IT-BPO sector grew by about 29 per cent year-on-year in fiscal 2007 while this year he growth would be in the region of about 20-22 per cent, Natarajan said while asking IT companies to focus on emerging markets to counter any negative impact of the global financial meltdown.

He said IT majors should look to diversify into engineering services, animation and other such options to sustain growth. He also expressed the hope that smaller cities would come to the forefront in IT and BPO business. "Pune has done it and we think Ahmedabad and other smaller cities can follow suit," he added.