Three of India’s IT service giants – Tata Consultancy Services (TCS), Infosys, and Wipro – held results calls yesterday revealing a booming business with room for multiple players.
Although the companies faced the highest attrition rates in three years and were forced to raise hiring targets, increasing use of technology during the pandemic has given a wide range of verticals a reason to shift from data centres to the cloud. In turn, the pandemic’s subsequent digitisation race has presented the IT consulting companies with a thriving market.
Infosys grew revenue 20.8 per cent year-on-year in US dollars to $4.25bn for Q3 of its fiscal 2022 ended 31 December. Net profit increased 9.7 per cent to $774m. The company raised its revenue growth guidance for the fiscal year by up to 20 per cent.
According to CEO Salil Parekh, Q3 growth was the fastest in over a decade.
Digital business – including cloud, analytics, internet-connected devices, and cybersecurity – expanded by 42.6 per cent and is now 58.5 per cent of overall revenues, said Parekh.
Attrition was the highest at Infosys of the three outsourcing giants at 25.5 per cent. Net headcount increased 12,450 and the annual college recruiting target was 55,000.
As for where these employees park themselves and their laptop, Parekh said hybrid work was on the cards. “We see, in the medium term, a tremendous opportunity for an efficient mix because clients have also seen that, once the work is done remotely or work from home, that more opportunity exists for that work to be done from a location farther away.”
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For TCS’ Q3 of fiscal 2021 ended 31 December, revenue was up 14.4 per cent year-on-year to $6.52bn. Net profit was up 10.5 per cent to $1.303bn thanks to growth in financial services, retail, manufacturing, and the life science services segment.
Growth in North America assisted TCS in its Q3 boost, making up half of its overall business and growing year-on-year by 18 per cent in terms of revenue. Europe, UK, and Latin America also grew year-on-year during the quarter by 17.5, 12.7, and 21.1 per cent respectively.
Attrition for TCS was the lowest of the three consulting firms, but still high at 15.3 per cent for the past 12-month period.
“This metric might rise further in Q4, but we believe that the churn is stabilizing for now,” said chief human resources officer Milind Lakkad. The company added 24,000 fresh grads during the quarter, bringing the total number of newbies up to 77,000 for the year. TCS has almost 557,000 employees.
The hiring spree could be an indication of expected and current attrition, new incoming projects, or both. The company said it added 10 new $100m-plus clients and 21 $50m clients in the quarter.
As for the return-to-office question, Lakkad said plans were currently on hold.
Revenue growth during Wipro’s Q3 of its fiscal 2022 ended 31 December was $2.7bn, up 29.6 per year-on-year, thanks to lots of activity from customers in the banking, retail and healthcare sectors.
The Americas and Europe were the top two markets, having grown at 28 per cent and 38 per cent respectively.
Net profit was $399.1m.
The company expects to grow between 2 and 4 per cent in the quarter ended March to $2.7-2.75bn, translating to a full-year growth of 27-28 per cent.
The company’s Annual Contract Value (ACV) grew over 47 per cent year-on-year, with bookings ranging between $10m and $30m.
Wipro made up its bookings through smaller orders than TCS and Infosys, but the execs were pleased nonetheless.
“We’ve done fabulously in bookings, frankly with the best performance ever,” said CEO Thierry Delaporte, who explained how the smaller bookings were able to bring positive results.
“Oftentimes we see clients indeed having a large transformation programme in mind, but willing to contractualize through chunks as opposed to having a big one, it doesn’t mean it’s not going to happen. We are observing that at times they like to be pragmatic and go with a phased approach as opposed to a big bang, that’s all fine for us, it doesn’t really change, as long as we are able to structure the way we are developing and driving our solution the same way.”
As for attrition, Wipro experienced 22.7 per cent. Like TCS’s Lakkad, Delaporte said it might stabilise or at least slightly improve in the next quarter.
Meanwhile, Wipro employees can likely still wear their pyjama bottoms for four more weeks as the company takes the proactive measure of a temporary work-from-home policy. After those four weeks, a hybrid model will be considered. ®
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