Indian IT expected to grow dollar revenue by 9-12% in FY2022: ICRA

Indian IT services companies are expected to grow by 9-12% in terms of US dollar revenue in FY 2022 according to a report by . The demand is driven by accelerated and robust demand for technologies from enterprises globally, and partly on the low based last year due to the impact of Covid-19. The report said that the accelerated digitisation augured well of the IT services industry, even as elevated attrition levels were a concern. “Growth momentum for the industry is likely to sustain over the near term, this has been supported by uptick in all key verticals such as BFSI, telecom, manufacturing, retail and distribution. Notwithstanding some moderation in FY2022 and FY2023, operating margins are expected to remain healthy,” said the report.

“Concerns have emanated from elevated attrition levels for the industry due to strong demand for digital technologies lack of adequate skilled manpower to service the same. Companies are reskilling employees to overcome this challenge. Moreover, they have also been able to achieve higher employee productivity through increased deployment of technology. Hiring by IT companies is at an all-time high buoyed by strong demand and net addition over past four quarters has been increasing exponentially,” said Deepak Jotwani, assistant vice president and Sector Head, ICRA.

IT services companies remain focused on enhancing the share of fixed price contracts as it assures better revenue visibility and also allows for higher deployment of offshore resources where the salaries are 60-70% lower coupled with better utilisation of manpower across such projects and deployment of automation. The benefits are shared with the client leading to mutual advantage. The share of fixed price contracts has remained between 60-65% over the past three years, it said. There was some increase in H2 FY2021, which has tapered to ~61% levels in Q2 FY2022 given the higher share of new contracts and mix of contracts secured.

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