The growth of Indian IT services companies is expected to accelerate in FY22 as spending will remain strong across verticals, aided by a consistent surge in demand for cloud, data analytics, digital transformation, cybersecurity, and artificial intelligence (AI), according to Emkay Research.
As per management commentary across companies, the BFSI vertical is on track to perform well in FY22 and IT spends in the retail vertical are going to get a boost led by investments in omni-channel commerce, marketing and supply-chain areas.
“We expect the revenue momentum seen in H1 to continue throughout FY22, led by secular broad-based demand trends and healthy deal wins. Further on pricing, the companies indicated that clients are more amenable for prices increases as they recognize the talent shortage in the market which should help soak some margin pressure on account of supply-side issues,” the brokerage firm said.
IT companies improved their sequential revenue growth trajectory, with tier-1 firms reporting 2.6-6.9% sequential dollar revenue growth and tier-2 services companies reporting a 6.1-12.8% quarterly growth. On an annual basis, tier-1 entities posted 11.3-29.5% growth and tier-2 firms recorded 17.7-37.4% growth.
“With enterprises across the world accelerating their digital transformation, IT companies continue to benefit from strong demand and continue to upgrade guidance for the current fiscal year,” Emkay said.
As per Gartner, enterprises will increasingly build new technologies and software and drive digital transformation initiatives aggressively as they continue to reinvent the future of work, focusing on creating secure infrastructure amid likely increasingly complex hybrid work environment.
