scorecardresearch

Q2FY23 results: IT pack turn in good numbers, cautious on global macros

Both Tata Consultancy Services (TCS) and Infosys sounded confident about the deal pipeline; TCS reported a total contract value of $8.1 billion for the quarter. Infosys’ Parekh said the deal pipeline was a big one and that the company has very large deals volume.

Q2FY23 results: IT pack turn in good numbers, cautious on global macros
“We want to be careful about what's going on in the macroeconomic environment and make sure we go into this watchfully,” Salil Parekh, MD & CEO, Infosys said.

While Infosys, TCS and HCLTech all reported reasonably good numbers for the September quarter, with HCL Tech beating the street handsomely, Wipro’s September quarter earnings trailed the consensus and were disappointing.

HCL Technologies has upped the FY23 revenue guidance by 50-150 bps to 13.5%-14.5% (in constant currency terms) and maintained its margin guidance of 18-20%. Infosys also raised its revenue guidance marginally to 15-16% for FY23 from 14-16% earlier, although it dropped the margin guidance slightly to 21-22% from 21-23%. However, all managements have sounded cautious given the extremely challenging global macro-environment.

“We want to be careful about what’s going on in the macroeconomic environment and make sure we go into this watchfully,” Salil Parekh, MD & CEO, Infosys said.

The TCS management observed the demand environment is considerably robust, though it may have slowed from the highs of FY22. Clients are somewhat cautious on uncertain and deteriorating macro environment though that has not materially impacted IT spends yet, nor has it led to significant delays in deal conversions or project cancellations, the management indicated.

Thierry Delaporte, CEO and MD, Wipro, said the company feels the need to be ‘cautiously optimistic’ adding that for now demand is strong. Wipro’s revenue growth guidance of 0.5-2% for the December quarter was subdued indicating some slowdown in organic growth.

Both Tata Consultancy Services (TCS) and Infosys sounded confident about the deal pipeline; TCS reported a total contract value of $8.1 billion for the quarter. Infosys’ Parekh said the deal pipeline was a big one and that the company has very large deals volume.

Also Read: Dispute between state-run CWC and Adani Ports

In terms of hiring, Infosys has added 10,000 employees in Q2FY23, the highest in the pack. However, the TCS management pointed out it had started hiring and investing in talent in previous quarters. Analysts feel the modest hiring at 9,800 employees for the second straight quarter could be partly due to the management’s intent to get back to normalised utilization rate.

Wipro, however, has hired in very small numbers. Analysts said the net headcount addition of 605 was in sharp contrast to strong additions in the previous quarters, and said Wipro may not have taken on freshers in Q2FY23, having on-boarded of close to 15,000 freshers in Q1. HCLTech is on track to hire close to 30,000 freshers in FY23.

Infosys reported a meaningful fall in attrition. TCS saw an increase in its attrition for the second quarter at 21.5%, while HCL’s remained flat at 23.8%; the quarterly annualised attrition was lower than in the previous quarter and analysts said it could trend down in the coming quarters. At Wipro, the management indicated that attrition has dropped below 23%.

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.

First published on: 14-10-2022 at 03:45 IST