IT focuses on new markets, areas when slowing down

NEW DELHI : India’s leading software-as-a-service companies such as Tata Consultancy Services, Infosys, HCLTech and Wipro may have to look for new markets and sectors to support their growth plans amid concerns about high inflation, cuts in discretionary spending, and saturation in mature markets.

However, industry analysts say the push to move into new segments could weigh on these companies’ costs and affect their operating margins in the coming quarters.

In its September quarter results, TCS reported constant currency revenue growth of 15.4% from a year earlier. Asia Pacific, India, Middle East and Africa contribute 15% Revenue 55,309 crore for the quarter with India taking 5.1% market share. While India has a modest contribution to total revenue, the country has outpaced TCS’s revenue growth in Europe (including the UK) with a 16.7% increase.

For Infosys, India accounted for 2.9% September quarter revenue was 36,538 crore. While the contribution is still small, the figure marks a year-over-year growth of 36%, the highest among all Infosys markets globally.

Over-dependence on the US and Europe, which is currently facing market turmoil due to the accumulation of many factors, may force Indian IT service companies to diversify their markets, according to analysts. school.

Akshara Bassi, global cloud and server market research analyst at research firm Counterpoint India, said factors such as a drop in new orders in the September quarter could be a clear sign for the future. see weakness in developed markets. “The company added 103 new customers in the quarter, down from 117 in the same period last year,” he told Infosys. This marks a more than 10% drop in the number of new orders the company signed during the quarter. This is a clear sign of weakness in established markets, which could affect the IT sector more in the coming quarters. “

Service providers also hint at plans underway to enter new markets. At HCLTech’s earnings conference, C. Vijayakumar, chief executive officer, said the company is increasing the number of facilities in India.

“We are regularly adding offices across several new markets and for the first time across India, which we call the ‘new scene’. We already have 25,000 people working in these offices and our hiring rate in these markets is at least 5-10% higher than we are hiring in established markets. his establishment,” he said.

Salil Parekh, CEO at Infosys, also said the company is working on many digital transformation projects in India, as he highlighted India’s contribution to the company’s revenue growth.

However, analysts insist on placing more emphasis on the growth opportunities that the new sectors represent for IT companies, in addition to the traditional sectors.

“The reason why IT services will look to diversify is primarily to rebalance and streamline their portfolios,” said Naveen Mishra, senior director and analyst at Gartner. Companies will invest more in providing digital services around cloud transformation and related areas, which will help them better adapt to the new market setup. “

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