The country’s top four IT companies saw their combined revenues for the June quarter at about Rs 1.47 trillion, up by a meagre 0.2% sequentially. In the March quarter of FY23, their combined revenue was at about Rs 1.46 trillion.
While their combined employee benefit cost in Q4FY23 was Rs 82,470 crore, it increased by 0.5% sequentially to Rs 82,925 in Q1FY24. Unsurprisingly, all the top four IT giants have seen their operating margin falling in the first quarter of FY24.
The employee benefit cost rose despite the headcount at the top four firms falling to 18,258 in the June quarter. Together, the top four have a total headcount of over 14 lakh employees.
Facing the onslaught of falling margins and muted top line growth, three of the four companies have either deferred or are dithering on their employees’ annual compensation review.
With job prospects very bleak, all the four companies saw their attrition level falling below 18% in the June quarter of FY24, from more than 21% two quarters ago.
The top four have also cut their full FY24 growth guidance after experiencing a quarter of project ramp downs and delay in clients’ decisions.
The shocking surprise came from Infosys, the second-largest IT company, which on Thursday sharply cut its revenue guidance for FY24 to 1.0-3.5% in constant currency terms, from 4-7% announced earlier. Though it maintained its operating margin guidance at 20-22%.
Rival Wipro also provided a bleak guidance for the July-September quarter. It said that revenue for the second quarter could be between -2-1% in constant currency terms.
IT bellwether TCS doesn’t give guidance, but the management indicated, in the post earnings press conference, that a double-digit growth appears to be a tall order.
HCLTech, the third-largest IT company, has maintained the guidance for the full financial year on both revenue and Ebit fronts. Its revenue guidance is at 6-8% for FY24 in constant currency and operating margin guidance is between 18-19%. The company is maintaining its guidance despite seeing a sequential negative growth in all its important metrics like revenue, operating profit and net profit in the June quarter.
While large deals have been coming to the top four, there has been delays in decisions made by clients. Even while Infosys saw its number of $100-million clients fall by 2 to 38 in the June quarter, TCS’ was stagnant at 60 since the March quarter of FY23.