Although the optimism of the technology industry is quite high about the demand environment, public sector contracts from the U.S. and Europe are due to shrivel in the coming year. Companies like Tata Consultancy Services (TCS) and Wipro Technologies, or firms like Infosys Technologies, would face the impact to a large extent as they have public sector exposure in these geographies that recently started focusing on these geographies for government contracts, as reported by Rachna Khanzode of Financial Express.

Gartner Vice President Stephen Prentice pointed out towards the pressure in the U.S. and Europe to create jobs and cut costs. "The European governments are still negotiating on competitive austerity, which means there is competition among the governments as to who can cut most. Therefore, public sector spending is going to shrink because we have not seen the end of cuts," he said.