India's information technology (IT) sector will witness subdued hiring in 2023-24 as macro uncertainties impact demand environment, with clients either taking a pause on spend or stopping discretionary spend, say human resource experts. To begin with, unlike earlier years, the three large IT players TCS, HCLTech, and Wipro have not provided any new hiring targets for the financial year. And Wipro has said that its hiring target will depend on the demand environment.
It's the second time Nasscom has projected single-digit growth in a decade.
IT sector's trading multiples hit post-Lehman lows, providing good entry points.
IT major Wipro's Azim Premji donated Rs 22 crore a day or Rs 7,904 crore in a year to emerge as the most generous Indian in FY20 and top a list of philanthropy. Premji pipped HCL Technologies' Shiv Nadar, who had earlier topped the list collated by Hurun Report India and Edelgive Foundation, by a wide margin.
'Pockets of mid and small-cap indices are showing exuberance and are discounting even FY23 valuations now.'
Polarisation and the increase in index weight of a few a stocks have weighed on performance. The worst performers include Nippon India Large Cap and HDFC Top 100 (2.6 per cent).
Industry experts are of the opinion that the spurt in recruitment happened as IT services firms went aggressive on hiring in anticipation of a strong demand environment.
The combined dividend payout by early-bird companies -- those that have declared their results for FY21 -- is up 8.9 per cent, lower than the 21.9 per cent rise in in FY20 but ahead of the underlying growth in India Inc business last year. Combined net sales of these early birds were down 1.8 per cent last financial year while net profit was up 27.3 per cent in FY21. Some top companies that have stepped up dividend payout in FY21 include Hindustan Unilever, Indus Towers, Tata Steel, Ultratech Cement, Larsen & Toubro, Dabur, Asian Paints, and UPL. In contrast, banks have skipped dividends under an RBI diktat while companies such as Marico, TCS, Maruti Suzuki, and Godrej Consumer are paying lower dividends for FY21.
'Companies are being forced to pay higher salaries to retain and hire employees due to a big rise in attrition in the industry.'
Tier-II and tier-III towns have a reason to rejoice.
After Infosys, hike in other IT companies also seen in 6-9% range.
The buyback, if successful, will surpass RIL's 2012 share repurchase of Rs 10,400 cr
An aggressive rate hike by the US Fed and the possibility of a recession can trigger a slide in these stocks, which will be a good opportunity to buy from a long-term perspective.
Currently, Deloitte, EY and KPMG with their associates work as statutory auditors of most of the top league domestic IT services firms. Owing to many alleged auditing lapses, the regulators have either imposed restrictions on the audit firms or are seeking to do so.
About 1,556 shares have advanced, 1,211 shares declined, and 182 shares are unchanged.
Persistent, L&T Technology and TechM named among leading service providers
Experts are of the opinion that though digital services hold the future, the companies are likely to take a hit during the transition period.
Despite higher gross additions, growth in overall customer base has been tepid for these companies, says Debasis Mohapatra.
Tata Consultancy Services scrip ended the day 4.27 per cent higher at Rs 2,214.65 apiece on the BSE.
RIL was among the top gainers in the Sensex pack, jumping over 3 per cent to hit its record closing high. Tech Mahindra, HCL Tech, Bharti Airtel, Infosys, HUL and ITC were also among the prominent gainers.
'The industry growth in 2016< came from the new digital technology segment which grew at over 20%.' 'The challenge for the industry is that the legacy business makes up almost 80% of revenue.' 'Hence the urgency to transform into digital business.'
'If the business doesn't recover in next 6-10 months, there might be situation where there would be some lay-offs...That may be required for survival and to ensure livelihood to millions of people.'
The 2019 list shows a 37 per cent jump in brand value for the Tata group, to $19.55 billion for 2019, the highest in the top 25.
Information technology firms appear to have lost their appeal at the Indian Institutes of Technology. Campus recruitment figures by major Indian and foreign IT firms have dipped this year, raising further concerns of an industry slowdown.
Infosys has emerged as the fastest growing IT services brand following 52 per cent brand value growth since last year and 80 per cent since 2020 to $12.8 billion, earning it third spot, the brand valuation consultancy said in its latest Global 500 IT Services Ranking report. TCS and Infosys have pushed IBM to fourth spot from second. IBM's brand value now stands at $10.6 billion, a decline of 34 per cent from last year and 50 per cent since 2020.
Ajit Mishra, vice president, research, Religare Broking, answers your stockmarket queries.
With the advent of new banks, IT firms will get boostto their businesses.
Sector experts say rising pressure on margins owing to price discounts on the core business, increased hiring in the US and emergence of new technology areas are key reasons for such cost cutting.
Mid-sized IT firms have stepped up hiring in the current fiscal year, adding more than half as many employees in the first quarter of FY19 as compared to the whole of the previous financial year. This momentum is likely to continue for the rest of 2018-19 (FY19) as well.
Investors are already factoring in the impact. The IT Index on the BSE exchange dipped 2.5 per cent, with Infosys, Wipro and TCS showing a decline.
Reliance improved its ranking this year to 121 from 142 last year, with a market value of $50.6 billion and assets worth $91.5 billion.
Mindtree, eclerx and Hexaware are trading at similar valuations to that of the larger peers.
Stricter regulations in US forces industry to look at these countries with a market size of $300 billion
The proposed annual quota for Indian companies could be between 10 and 15 per cent. Currently, there are no country-specific limits on H-1B allotment.
With Democrats having an upper hand in US Congress, the Donald Trump administration will find it difficult to come up with any future legislative changes with regard to visa regulations.
In July-Sept 2016-2017, TCS had missed street expectations with 7.8% growth in revenue.
Ajit Mishra, vice president, Research, Religare Broking, answers your queries.
India's top IT companies have shown a hiatus between their performance on the bourses in the pandemic period and earnings growth. The combined market cap of the top five IT companies - Tata Consultancy Services, Infosys, Wipro, HCL Technologies, and Tech Mahindra - is up 87 per cent since the end of March 2020. In comparison, the benchmark BSE Sensex is up 68 per cent during the period. So the industry beat the broader market by a big margin in the last one year.
The greenback rose 9 percent against currencies.
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