A slowdown in hiring by India's top IT companies has resulted in a sharp increase in the industry's profit per employee in Q3FY23. The top four IT companies earned a net profit of 1.7 lakh per employee during October-December 2022, up 8.6 per cent from Rs 1.57 lakh in Q2FY23 and 16.3 per cent from a record low of Rs 1.47 lakh in Q1FY23. Earnings per employee in the third quarter were, however, still down 0.9 per cent on a year-on-year (YoY) basis.
'We are sure FY25 is going to be better...But to call out that all problems are behind us is a bit early.' 'The underlying business sentiment has not changed significantly.'
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.
Despite higher gross additions, growth in overall customer base has been tepid for these companies, says Debasis Mohapatra.
Among the Sensex firms, ITC, Kotak Mahindra Bank, ICICI Bank, Nestle, Axis Bank, IndusInd Bank, UltraTech Cement, Bajaj Finance, Maruti and HDFC Bank were the major laggards.
Far from public glare, company is investing in tech firms and providing consultancy.
The June quarter is usually considered as a seasonally strong period for the IT sector.
After years of losing money on two of the group's biggest bets - global steel business and domestic passenger cars - there are strong signs of a revival in both businesses.
Benchmark indices Sensex and Nifty ended with gains on Wednesday, extending the previous day rally amid lower level of inflation on domestic front and better-than-expected inflation readings from the US. The 30-share BSE Sensex climbed 144.61 points or 0.23 per cent to settle at 62,677.91. During the day, it jumped 301.81 points or 0.48 per cent to 62,835.11.
Investors' wealth climbed Rs 3.20 lakh crore as markets staged a smart comeback on Wednesday after falling in the last eight trading sessions. The BSE Sensex rallied 448.96 points or 0.76 per cent to settle at 59,411.08. During the day, it jumped 513.33 points or 0.87 per cent to 59,475.45.
Benchmark indices finished on a weak note on Thursday, extending their previous day's decline amid a negative trend in global equity markets after the US Fed hiked interest rates by 75 basis points. The 30-share BSE Sensex declined 69.68 points or 0.11 per cent to settle at 60,836.41. During the day, it tanked 420.95 points or 0.69 per cent to 60,485.14.
Analyst are cautious about the performance of IT services sector from January to March quarter (Q4) of FY24 and the first half (H1) of FY25. While the Bloomberg consensus on revenue implies the market is expecting 2-3 per cent growth on a quarter-on-quarter (Q-o-Q) basis for the IT majors through FY25, the H1FY25 is likely to see even flatter returns, and Q4FY24 is likely to be poor. There is likely to be some recovery in the second half (H2FY25) but even so, there's a chance that the market will be overall disappointed.
Experts are of the opinion that though digital services hold the future, the companies are likely to take a hit during the transition period.
As the job markets open up, top IT services firms may look at a tiered strategy in which they hire entry-level talents at higher salaries, amid a major technological shift, say HR analysts.
While the current headcount reduction has more to do with slowing demand, the rise of artificial intelligence will impact jobs in the future.
Though the largest software exporter Tata Consultancy Services on Friday asserted that the lingering European debt crisis has not yet impacted its business, it admitted that weakening of the euro and pound against the rupee will have some adverse impact on its revenue if the trend continues.
The country's largest information technology exporter, Tata Consultancy Services (TCS), which currently derives about 27 per cent of its revenues from Europe, says though European companies lag behind their counterparts in the US in terms of outlook, Europe still is their priority.
'The race is now on for Indian IT firms to develop their AI prowess and focus on a software-first approach to services as the people element becomes more complicated with Trump's expected new regulations.'
Apart from such advisory, IT biggies such as TCS, Infosys and HCL Tech among others have been pursuing 'remote working' model to overcome the situation.
The company has been able to help clients to transform their business and beat cost during the slowdown.
Certain changes in the past two or three years could have a long-term structural impact on the IT services market.
The earnings season this financial year is expected to start on an exciting note, as two information technology (IT) behemoths Infosys and Tata Consultancy Services (TCS) report their first quarter numbers on the same day. By now, TCS is expected to report a better set of numbers than Infosys.
The first quarter results (Q1FY25) of Indian IT services hint towards better fiscal growth than the preceding year, but as the management commentary said, "there is still some time for the industry to be firing on all cylinders." Among the majors-Tata Consultancy Services (TCS), Infosys, HCLTech, and Wipro-it is the Bengaluru-based Infosys that has performed better, which was also evident in its full-year revenue guidance.
While industry leaders Tata Consultancy Services and Wipro have announced deferring wage-hike plans, other players such as Infosys and HCL Technologies are expected to follow suit, according to industry insiders.
The branding exercise is estimated cost Rs 100-200 crore to the Tata Group.
Mutual funds (MFs) are betting on a turnaround in the healthcare sector to boost returns but are divided on the prospects of the information technology (IT) sector amid uncertain growth outlook. At the end of June, all of the top 20 fund houses were overweight on the healthcare sector vis--vis the sector's presence in the BSE 200 index, shows a report by Motilal Oswal Financial Services (MOFS). In the case of the IT sector, only six of the 20 fund houses had overweight positions.
"Outsourcing will continue. Even with the increase in wages in India by 14 or 14.5 per cent a year, we are still competitive upto the foreseeable future till 2011-12." TCS CEO and managing director S Ramadorai told reporters.
Indian IT majors may have tightened their belts in various areas to contain costs as a fallout of the global economic slowdown. But most of them see continuing value when it comes to employee training, even though it skims crores (tens of millions) of rupees off their top-lines.
Though domestic IT majors like Infosys Technologies, Tata Consultancy Services and HCL Technologies painted a gloomy picture of the IT sector in the coming quarters, technology bellwether Cognizant Technology Solutions and Genpact, India's largest Business Process Outsourcing firm, not only posted better results but have also given decent guidance to the markets.
Microsoft has bought 10 per cent stake in TCS China, a joint venture promoted by India's largest IT services firm Tata Consultancy Services and three state-owned Chinese companies.
Cognizant jumps 13 ranks to become 4th most valued.
But MNCs like IBM, Accenture, CSC and HP likely to get affected more.
TCS, India's largest IT company, has appointed and approved current TCS chief operating officer and executive director N Chandrasekaran as the CEO and Managing Director-designate.
'The top five IT giants are not hiring, but most of the freshers want to start their careers with the top five IT firms.' 'In today's scenario this is a challenge.'
TCS saw its headcount reduced by 6,333. Infosys' headcount decreased by almost 7,500, and HCLTech saw its employee numbers shrink by 2,299.
Large Indian IT services companies are expected to report "muted" sequential show in a traditionally strong second quarter, as macroeconomic challenges continue to weigh on global discretionary spending, say market watchers. The big earnings week for tech heavyweights is up ahead, with Tata Consultancy Services (TCS) scheduled to announce its results on October 11, and both Infosys and HCL Technologies on October 12. Wipro is slated to declare its Q2FY24 results next week, on October 18.
Indian IT firms are learning to cope with the appreciating rupee, according to Pradeep Udhas, global head (sourcing advisory), KPMG.
The company, which in the previous quarter announced former Capgemini top executive Thierry Delaporte as its new chief executive officer and managing director, is looking at improving its performance in coming quarters.
© 2026 Rediff.com - Advertise with us - Disclaimer - Privacy Policy - Sitemap - Feedback - About us - Terms of use - Grievances