India’s IT Industry Continues Upward Momentum in Q4 FY18-19

Overview

India’s information technology (IT) services industry continues its moderate momentum as most of the IT services companies covered in the report exhibited above-average growth.  In this report, we analyze the revenues of India’s IT services sector for the fourth quarter of financial year 2018-19 and compare these with the same period the previous year.

This report discusses the financial results of the top 18 India-based IT companies listed on the National Stock Exchange (NSE), Bombay Stock Exchange (BSE), or both.  We believe this Insight provides a representative sample of India’s IT market.  The suppliers included in this report recorded combined quarterly revenue of $15.4 billion, representing 7.2 percent year-over-year growth rate.  Only three out of the 18 companies reported a marginal year-over-year decrease in software or product revenues, while the rest showed growth in Q4.  The rupee depreciated by 7.3 percent during the quarter compared with the same period last year.

Supplier Revenues for India’s IT industry

This ARC Advisory Group report discusses the most recent quarterly revenue results of the major publicly traded IT services companies based in India.  We translated financials reported in Indian rupees to US dollars using an average exchange rate for the given reporting period.  Owing to this translation, some companies may show negative growth.  The suppliers’ reporting period for this analysis is the quarter ending in March unless stated otherwise.  We have considered the consolidated revenues for all vendors, including subsidiaries’ revenues, except for Wipro, for which we only considered IT products and services. 

3i Infotech reported total revenue of $43.1 million for the quarter ending March 31, 2019.  This represents a slight decline in growth by 0.6 percent compared with the same period prior year.  Ninety-five percent of 3i Infotech’s revenues came from “IT Solutions” (software products & services, software development, consulting, and IT infrastructure services) and the rest from “Transaction Services” (IT-enabled services). 

Cyient reported revenue of $165.2 million for the quarter ending March 31, 2019.  This represents a marginal growth of 0.1 percent compared with the same period prior year.  Geographically, revenues from the Americas contributed 52 percent, EMEA 24 percent, while APAC and others contributed 24 percent.  From the business unit perspective, contributors were: 33.9 percent from aerospace & defense; 12.3 percent from transportation; 8.5 percent from industrial, energy & natural resources; 5.6 percent from semiconductor; 2 percent from medical & healthcare; 15.3 percent from utilities and geospatial; and 22.3 percent from communications.  Industry-wise, revenue was 59.2 percent from aerospace and defense, 15.5 percent from industrial, 14.3 percent from medical, 3.1 percent from communications, and 7.9 percent from others.  Cyient added 5 new clients in this quarter. Total employee strength was 14,1423 at the end of Q4.

HCL Technologies achieved total revenue of $2.2 billion for the Q4 quarter, representing a 11.8 percent year-over-year growth rate.  Indus-try application services contributed 32.6 percent, infrastructure services 38.9 percent, business services 4.5 percent, and engineering and R&D services 23.9 percent in Q4.  Geographically, 62.9 percent of revenues came from the Americas, 29.7 percent from Europe, and 7.4 percent from the ROW.  Vertically, manufacturing contributed 36 percent to the growth of HCL and financial services 21.1 percent.  Life sciences & healthcare contributed 13 percent, retail & CPG 10 percent, public ser-vices contributed 11.1 percent, telecommunications 8.6 percent.  The total employee count in HCL was 137,965 in this quarter. 

Hexaware Technologies reported a total of $180 million revenues, representing 11.7 percent growth over the same quarter prior year.  Vertically, banking and financial services (the largest focus vertical for Hex-aware) contributed 42.1 percent; manufacturing, consumer, and other 15.2 percent; healthcare and insurance 19.1 percent; professional ser-vices 13.8 percent; and travel and transportation 9.9 percent. Segment-wise, application development & maintenance (ADM) contributed 35.1 percent to the revenues, enterprise solutions 9.5 percent, quality assurance and testing services (QATS) 17.5 percent, business intelligence & analytics 13.1 percent, business process services (BPS) 7.3 percent, and infrastructure management services (IMS) 17.5 percent.  Geographically, 76.9 percent of revenues came from the Americas; 13 percent from Europe and 10.1 percent from Asia Pacific.  Hexaware’s employee count including trainees during the quarter stood at 16,509 at the end of this quarter.  Hexaware added four new clients and signed agreement with TCV of $36 million in Q4.

Infosys reported $3,060 million revenues for the quarter ended March 31, 2019.  This represents 9.1 percent growth over the same period the prior year.  Infosys and its subsidiaries added 321 customers during the period.  Vertically, 31.6 percent of revenues came from insurance banking and financial services; 17.7 percent from manufacturing & hi-tech; 21.9 percent from retail and life sciences; and 26.2 percent from energy, utilities, and communication and services; and others contributed 2.6 percent.  By service offering, business IT services contributed 94.6 and products, platforms, and solutions 5.4 percent.  Geographically, 61.2 percent of revenues came from North America, 24 percent from Europe, 2.3 percent from India, and 12.5 percent from ROW.  Infosys and its subsidiaries had a total headcount of 228,123 employees at the end of this quarter.

KPIT-Birlasoft - Since January 01, 2019, the whole of engineering business is demerged under KPIT Technologies Limited (earlier KPIT Engineering Limited). The company reported revenue of $71.1 million for the quarter ended March 31, 2019.  This represents a growth of 1.1 percent year over year.  Geographically, the Americas contributed 79 per-cent to KPIT’s Q4 revenues, Europe 11.1 percent, and ROW 9.9 percent.  Vertically, automotive recorded 13.1 percent, manufacturing and hi-tech & media recorded 19.4 percent, energy and utilities 18.5 percent, and BFSI recorded 20.2 percent; and CPG and retail recorded 13.5 percent; and life sciences recorded 15.2 percent. Segment-wise, integrated enterprise solutions represented 31.4 percent of revenues; and SAP practice 20.4 percent, and digital transformation (enterprise solutions) 29.1 per-cent; and custom application development 10.9 percent; and products & platforms and other horizontal 8.2 percent.  The company added one new customer during the quarter, with total headcount of 10,061 employees on March 31, 2019.

Mindtree reported revenue of $262 million for the quarter.  This represents 15.8 percent year-over-year growth in revenue.  Geographically, 73.6 percent revenues came from the Americas, 18.5 percent from Eu-rope, 3.7 percent from India, and 4.2 percent from ROW.  Vertically, 39.6 percent of revenues came from technology, media and services; 21.8 percent from BFSI; 22.2 percent from retail, CPG, and manufacturing; and 16.4 percent from travel & hospitality.  The company added 15 new clients and one $100 million client in this quarter.  The company’s employee strength was 20,204 on March 31, 2019.

NIIT Technologies reported revenue of $151 million for the quarter ended March 31, 2019.  This represents a growth of 23.2 percent from the prior year.  Geographically, revenues from the Americas contributed 49 percent, EMEA contributed 33 percent, and ROW contributed 18 percent.  Vertically, banking and financial services and insurance was a major contributor to the revenues with 44 percent; travel & transportation 27 percent; and others 29 percent.  Segment split is as follows – application development and management contributed 70 percent, business process outsourcing 4 percent, management services 17 percent, system integration and package implementation 4 percent, and IP assets 5 per-cent.  In Q4, the company’s total headcount was 10,263. The company added 11 new clients in this quarter.

Persistent Systems reported revenue of $118.3 million for the quarter ended March 31, 2019.  This represented 1.2 percent growth compared with the previous year.  Services contributed 78.4 percent while the IP-led business contributed to 21.6 percent of Persistent’s business.  Segment-wise, services contributed 44.6 percent to the total revenues, digital 24.4 percent, alliance 24.8 percent, and accelerate 6.2 percent.  Geography-wise, North America contributed 80.9 percent, Europe 7.9 percent, India 7.7 percent, and ROW 3.5 percent.

Ramco reported revenue of $20.5 million with a growth of 8.1 percent in the fourth quarter.  Majority of Ramco’s revenue came from markets outside India. 

Rolta reported revenue of $56 million in Q4, representing a year-over-year decline of 41.7 percent as compared with the same period in the previous year.  Segment-wise, 22.9 percent of Rolta’s revenues came from enterprise geospatial & engineering solutions (EGES), while the remaining 77.1 percent came from system integration & enterprise IT Solutions (EITS).

Sasken reported revenue of $19.2 million for the quarter ended March 31, 2019.  This represents marginal decline of 3.9 percent year over year.  Geographically, 43 percent revenues came from North America, 21 per-cent from EMEA, 24 percent from India, and 12 percent from APAC.  Sasken group had a total headcount of 18,337 in this quarter.

Sonata reported total revenue of $120.3 million for the quarter ended March 31, 2019.  This represents a revenue growth of 23.7 percent year over year.  Geography-wise, 55 percent of revenues came from North America; 32 percent from Europe, including UK; and 13 percent from ROW.  Vertically, 26 percent of revenues came from outsourced product development (OPD); 28 percent from travel transportation and logistics (TTL); 27 percent from retail & CPG; and 19 percent from others.  The employee count stood at 4,042 in this quarter. The company added three new customers in Q4.

Tata Elxsi recorded $58.3 million in revenue for the quarter ended March 31, 2019.  This represents stable growth year over year.  Segment-wise, 83.6 percent came from embedded product design, 12.3 percent from industrial design & visualization, and 4.1 percent from system integration & support services.

TCS’ quarterly revenue increased 8.5 percent year over year to $5.3 billion.   Geographically, North America contributed 50.7 percent and Lat-in America 2 percent.  Within Europe, UK contributed 15.9 percent and Continental Europe 14.1 percent.  India contributed 5.8 percent, APAC 9.5 percent, and MEA 2.5 percent. Vertically, banking and financial services contributed 30.8 percent, retail & CPG 16.2 percent, telecom 6.9 percent, manufacturing 7.2 percent, life sciences & healthcare 7.7 per-cent, energy & utilities 4.6 percent, technology & services 7.4 percent, and regional markets & other verticals 19.2 percent. The addition of 6,356 employees led to a total headcount of 424,285 at the end of the quarter.

ARC Advisory Group clients can view the complete report at ARC Client Portal

If you would like to buy this report or obtain information about how to become a client, please Contact Us     

Keywords: IT (Information Technology), IT Services, Quarterly Supplier Revenues, Software Development, Business Process Outsourcing (BPO), ARC Advisory Group.