Margins Could Be Hit

As TCS kicks off the earning season of the first quarter of FY20, softness in spends by global banking and financial services firms is likely to haunt Indian IT service companies this year. Cross currency headwinds, wage hikes, high attrition, visa costs and a strong rupee are expected to play spoilsport in margins.

Analysts expect steady revenue growth for bigger firms, whereas growth for mid-tier companies is likely to be muted this quarter. Double-digit organic revenue growth year-on-year is expected for TCS and Infosys, largely on the back of ramp-up of large deals and chunkier digital deal sizes. Volatility is expected to continue for the other players. Analysts also don't expect any change to the revenue guidance provided by Infosys and HCL Tech for FY20 at 7.5-9.5 per cent and 14-16 per cent, respectively.