New Delhi India’s top software services companies such as Tata Consultancy Services, Infosys, HCLTech and Wipro have to explore new markets and sectors to support their growth plans amid concerns over high inflation, cut in discretionary spending and saturation in established markets. can.
However, industry analysts say efforts to move into new segments could impact costs for these companies and impact their operating margins in the coming quarters.
In its September quarter results, TCS reported constant currency revenue growth of 15.4 per cent over a year ago. Asia Pacific, India, Middle East and Africa contributed 15% of this 55,309 crore revenue in the quarter in which India accounts for 5.1%. While India contributes marginally to the overall revenue, the country outpaced the revenue growth for TCS in Europe (including the UK) with a growth of 16.7%.
For Infosys, India’s share was 2.9% 36,538 crore September quarter revenue. While the contribution remains small, it marked a growth of 36% from a year ago, the highest among all Infosys markets globally.
According to analysts, heavy reliance on US and Europe, which are currently facing market constraints from accumulation of factors, may force market diversification by Indian IT services firms.
Akshara Bassi, Research Analyst, Global Cloud and Server Markets at research firm Counterpoint India, said factors such as a drop in new orders in the September quarter could be clear indicators of weakness in developed markets. On Infosys, he said, “The company added 103 new customers during the quarter, down from 117 in the same quarter last year. This marks a decline of more than 10% in the number of new orders signed by the company in the quarter.” This is a clear indication that there is weakness in the established markets, which may further impact the IT sector in the coming quarters.”
Service providers also indicated plans to enter new markets. C. Vijayakumar, Chief Executive Officer at HCLTech’s Earnings Conference, said the company is expanding the number of facilities in India.
“We are regularly adding offices across India in several new and first-time markets, which we call ‘new vistas.’ We already have 25,000 employees working in these offices, and our placements in these markets The pace of hiring is at least 5-10% higher than the rate at which we are hiring in our established markets.”
Infosys CEO Salil Parekh also said that the company is working on several digital transformation projects in India, as he emphasized on the growth of India’s contribution to the company’s revenue.
However, analysts emphasized greater emphasis on growth opportunities, which represent new areas for IT companies beyond traditional sectors.
Navin Mishra, Senior Director and Analyst, Gartner said, “The reason for diversifying into IT services is primarily to rebalance and rationalize our portfolio. Companies will invest more in offering digital services around cloud transformation and related areas, helping them better adapt to new market setups.”
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