Connect with us

Headlines of the Day

Indian IT firms find relief in domestic market amid US slowdown

As Indian IT services firms are increasingly coming under stress in the American market, there was some consolation from an unexpected quarter – a secular spurt in businesses from India and Rest of the World (RoW) region. From TCS to LTTS, including mid-tier IT firms like Happiest Minds, saw their revenue bump up in India.

For TCS, India geography reported a robust growth of 23.4% year on year (y-o-y) in cc terms. The growth driver was the BSNL deal that was recently bagged by the IT bellwether. This is in sharp contrast to North America, that grew negatively at -3% for TCS.

Similarly, other regions like the Middle East, Africa, Latin America and the UK grew at a much slower rate of 16%, 13.2% and 8.1% respectively. The revenue share of India for TCS was about 4.9% in the September quarter, which grew to 6.1% in the December quarter.

A recent Gartner report said that in 2024, spending on IT services in India is projected to grow 13.4%, up from 10.1% in 2023. This is in contrast to the world-wide spending on IT services that is expected to grow 8.7% in 2024. The report added that due to a lack of internal skills, Indian businesses are looking to partner with external providers in areas such as AI, industry cloud, security and data analytics, resulting in the expected growth of IT services spending in 2024.

For LTTS (L&T Technology Services), revenue from India in the third quarter grew at 33.4% y-o-y, followed by Europe and Rest of the World (RoW), that grew at 21.1% and 11.7% respectively. North America business grew just 2.1% in the same period. The IT engineering service firm gets around 21% of its revenue from India market.

Tata Elxsi saw its revenue share from India and RoW increasing by 0.9% and 0.8% respectively. While Europe increased by 0.5%, America’s was down by 2.2% in Q3 of FY24.

Happiest Minds is seeing its revenue from India steadily grow for many quarters. India is the second largest market for the company. From 15.4% in Q3 of FY23, the share of India has grown to 16.4% in the just-concluded quarter.

Joseph Anantharaju, executive vice chairman at Happiest Minds, said, “If you see over the last three or four years, every year, our share of revenue from India has kept increasing. And the good thing is we’re not doing this at a compromise margins. Our GMs (gross margins) may not be at the same level as US, but they’re comparable.”

He added, “We are quite bullish about the Indian market, because I think the economic environment is quite positive out here and relative to many of the other geographies or countries, I would say it’s much better. And the scope for digitisation is also quite high out here because many of the industries and even companies are really not even in the early stages of digitisation.”

But he cautioned that it’s a value-conscious market and they will have to figure out what are the deals they are going to take in areas where they can have a value proposition that will allow them to command a little bit of premium.

Amongst large players, Tech Mahindra and LTIMindtree also saw an increase in their revenue from RoW. India as a geographical region is included in the RoW metric that many IT companies disclose in their earnings documents. There are also smaller IT firms like Sonata, Newgen and Aurionpro who get their biggest share of revenue from India market. Financial Express

Click to comment

You must be logged in to post a comment Login

Leave a Reply

Copyright © 2024 Communications Today

error: Content is protected !!