Quarterly Report of India IT Suppliers 2022, Q1

Calendar Year Q1 2022 is Indian Financial Year Q4 2021-22

Introduction

Annual

• In this Insight, ARC Advisory Group includes the most recent quarterly results for major Indian IT suppliers that publicly report their results.
• 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.
• Companies have substantially increased the hiring of fresh graduates to expand the talent pool of skilled employees, which should hopefully address the shortage of skilled workers and reduce the cost of delivery.

• Q1

• Financial results during calendar period from January 1 to March 31.
• India’s information technology (IT) services industry continues its upward momentum as most of the IT services companies covered in the report exhibited above-average growth. We continue to remain optimistic on the Indian IT space, with strong fundamentals.
• In this report, we analyze the revenues of India’s IT services sector for the fourth  quarter of financial year 2021-22 and compare these with the same period the previous year. The increase in global demand for IT services has led to an unprecedented software talent crunch in India, prompting exceptional salary hikes and a drop in margins for companies.

Overview

Suppliers Analyzed in Report

Q1

• We expect the companies that we covered to report steady sequential revenue growth on good demand, healthy deal wins, and active mergers and acquisition activities.
• After a blockbuster third quarter, analysts are bullish on the performance of Indian IT companies between January to March as well.
• The FY22 fourth quarter of Tata Consultancy Services (TCS), HCL, Infosys and Wipro suggests the bump-up in IT companies’ profit margin after the pandemic set in is coming to an end.

Quarterly Market Trends

Q1

• The IT services sector delivered a stellar performance during the first three quarters of the fiscal year. Indian IT & Services industry recorded combined quarterly revenue of $18.6 billion and recorded a 14 percent year-over-year (YoY) growth as compared to last year.
• We expect healthy growth momentum in FY23 given continued demand for compressed technology transformation led by cloud, data analytics, and customer experience.
• The growth of Indian IT companies is expected to moderate in Q4FY22 as witnessed in Q4quarters historically. Margins are expected to take a hit due to continued higher employee expenses.

Cyient - YoY Quarterly Trends

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