IT firms to witness moderate growth in Q3 FY24

The growth will be on the back of discretionary tech spending by clients due to global economic challenges

January 6, 2023

The country’s top five Information Technology (IT) service providers are expected to grow in the range of 0.1-3.7% sequentially

Revenue growth is expected to increase from mid-teens to mid-to-high single digits in December 2022

Margins are expected to expand by 20-100 basis points (bps) sequentially for tier-1 companies and 20-50 bps for tier-2 companies

India’s IT services industry generates close to 60-65% of its revenues from the US market and 20-25% from Europe

Indian Information Technology (IT) companies are expected to report modest numbers for the third quarter of FY24 on the back of discretionary tech spending by clients due to global economic challenges, according to media reports.

According to a poll conducted by Economic Times, the country’s top five IT service providers are expected to grow in the range of 0.1-3.7% sequentially in terms of constant currency revenue. The highest among these will be HCLTech, followed by Tata Consultancy Services. 

Revenue growth is expected to increase from mid-teens to mid-to-high single digits in December 2022. Additionally, as technology workers were switching jobs less frequently due to the uncertainty caused by geopolitical challenges, they expect a further sequential improvement in operating margins.

The reports also mentioned that margins are expected to expand by 20-100 basis points (bps) sequentially for tier-1 companies and 20-50 bps for tier-2 companies with further employment growth, and rupee depreciation.

India’s IT services industry generates close to 60-65% of its revenues from the US market and 20-25% from Europe. 

With a boom in the consumption of internet services, growing tech infrastructure and the demand potential for emerging technologies, IT companies can be expected to witness further growth in the coming quarters.


Source: Economic Times

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