IT negotiates a tight corner

Jan 28 2013, 02:50 IST
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SummaryStrange as it may seem, drawing up a standard for the Indian IT industry has become a difficult task.

industry, has turned out to be a surprise for the market, which was expecting a muted performance. Even as concerns on demand from the US and Europe cloud the horizon, top-tier companies have still managed to post healthy numbers and protecting volumes.

Of the pack, only Wipro, bucked the trend with a 1% decline in volume owing to lesser business in the non-discretionary spend and a negative growth of 0.7% sequentially in the US region. Analysts pointed out that Wipro’s ‘poor’ performance is more to do with clients and verticals the company is catering to and less about the overall market in the US.

TCS’ revenue from North America grew 2.5% sequentially, while it was 1.6% for Infosys. Noida-headquartered HCL Technologies recorded a growth of 3.4% quarter-on-quarter in Americas. In terms of volume HCL Technologies posted a 3% growth, TCS —1.25% and Infosys—1.5%.

The combined revenues of the top-four players in the sector grew by over 16% year-on-year, while profits showed an increase of 18%. However, Dhawan of PwC pointed out that this is not anywhere close to the quantum of growth the industry has achieved in the past. “If you compare the results of Q3’12 with Q3’11, the top-4 companies combined achieved an impressive revenue and profit growth of 32% and 24% respectively.”

In an interaction with FE after the quarterly results, Infosys CEO SD Shibulal said, “In this quarter we have performed well and if one dissect the numbers, the growth has been more broad-based. In consulting and system integration segment we grew by 8% which is higher than company’s average. The aspiration is to create a balanced portfolio.”

Analysts are expecting this year to spell a turnaround for the Indian IT sector. “The pent-up demand, geographical diversification and focus on niche service offerings will help drive the business growth. The global IT spending this year is also expected to increase. And with a high technology adoption by the Indian government, the domestic IT spending is also bound to go up,” added Dhawan.

This could also be the time when the Indian IT industry could see a real turnaround after many false hopes in the past. “The bottoming out for the industry has happened and now growth is coming back,” said, Sudin Apte, CEO, Offshore Insights, an IT-BPO advisory firm. However, he cautioned that it is very unlikely to be any kind of booming growth but more in the lower double digit range.

There

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