Net hiring in India's top software exporters declined to the lowest level in 11 quarters in December 2022, underscoring the stress the sector is experiencing due to global headwinds, said an Economic Times (ET) report.
"India’s top four software exporters — Tata Consultancy Services, Infosys, HCL Tech and Wipro — together recorded a net addition of 1,940 employees in the quarter ended December 2022, the lowest in 11 quarters, as demand for technology services slows amid global macroeconomic uncertainty and geopolitical concerns," the ET report said.
"The decline marks a sharp drop of nearly 97 percent from the net addition of 61,137 employees by the big four IT firms in the third quarter of FY22 when they competed aggressively for talent to meet the rising demand for digitisation triggered by the pandemic. This is also a nearly 94 percent drop from a net addition of 28,836 in the second quarter of FY23," the report added.
Experts and brokerage firms have been flagging concerns that the economic slowdown in the West has hit the demand scenario for the sector and the IT space may remain under pressure for the short term.
"IT services companies till now, managed to exceed Street expectations on revenue growth. However, companies warned about delays in decision-making by clients. Most companies scaled down hiring stoking revenue growth slowdown concerns," said Mitul Shah, Head of Research – Institutional Desk at Reliance Securities.
As per a PTI report, India's IT services heavyweights delivered between 14-20 percent on-year growth in topline for the December quarter, as they raised guard on global uncertainties and choppy verticals, but remained hopeful that costs, as well as business considerations, will drive tech demand.
December-quarter net profit of the top IT deck rose between three per cent (Wipro) to 19 percent (HCL Tech) year-on-year, and about 4 percent (TCS) to 17 percent (HCL Tech) when computed on a sequential basis.
As per a report by Nuvama Institutional Equities, the Q4CY22 (Q3FY23) ISG deal flow data was neutral for Indian IT companies – deal flow remained stable in the US; impacted by cross currency in EU and China-specific reasons in APAC (limited presence for Indian IT companies).
Nuvama added that at the same time, the outlook and guidance for CY23 were decent. ISG continues to see strong demand in ADM, BPO, ER&D, Cloud, and Analytics – which is positive for Indian IT players.
"We maintain a positive stance on the sector. We see a sustainable strong demand environment in the form of transformational and/or cost-takeout deals to drive revenue growth; margins tailwinds to aid higher earnings growth, over the next three years," said Nuvama.
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