The Indian IT sector faces significant headwinds as global demand has declined due to macroeconomic factors. IT clients have cut down on discretionary spending and limited their IT budget
In Q4FY23, the Indian IT sector’s share of India Inc's profits reached a 21-quarter low of 9.7 per cent, down from 34 per cent in Q4FY20, said a smallcase report. The sector experienced a slowdown, with quarterly profit contracting by 10.5 per YoY and a sequential drop of nearly 7 per cent in the March quarter
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In QFY24, TCS’ total contract value (TCV) stood at $10.2 billion, excluding the recent BSNL 5G deal win worth $1.83 billion. However, the company’s operating profit fell by 5 per cent and operating margin declined from 24.5 per cent to 23.2 per cent
HCL Technologies’ Q1FY24 performance displayed a mixed picture. The company reported a promising 7.6 per cent YoY growth in net profit but experienced an 11.2 per cent sequential drop. The operating margin slipped from 18.25 per cent to 16.9 per cent in Q1 FY24, indicating a compression in profitability
Wipro reported a consolidated net profit of Rs 2,870.1 crore in FY23, a 12 per cent increase on an annual basis. But the IT company also witnessed a decrease in IT Services segment revenue (non-GAAP constant currency) by 2.8 per cent on a sequential basis
As per analysts report from Kotak Securities and ICICI Securities, Tier-2 IT companies are expected to outperform Tier-1 peers in terms of QoQ revenue growth. Tier-2 companies are predicted to achieve a 2.8% growth, while Tier-1 companies are expected to lag behind at 0.2% growth
Major Indian IT players are also investing heavily in emerging technologies like AI, cloud, cybersecurity, etc. Wipro has set aside $1 billion for AI investments, while TCS has announced that over 50,000 staff members would be trained on the latest AI developments
Despite the immediate headwinds, the Indian IT sector remains at the heart of digital transformation efforts worldwide. Moderation in rate hikes and revival of the world economy are expected to ease conditions for the Indian IT sector
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