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Double Digit Growth a constant theme for FY22 - Indian IT Results Snapshot for TCS, Infosys and Wipro
Double Digit Growth a constant theme for FY22 - Indian IT Results Snapshot for TCS, Infosys and Wipro

April 16, 2021

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One segment which has beaten all odds despite the pandemic, as highlighted in the words of our PM “When the chips were down, your code kept things running” is the Indian IT segment. This strong statement is further supported by the fourth quarter results of top IT companies which have also reported a very optimistic outlook.

A strong fourth quarter to end the year…

Keeping the momentum going the top three companies have posted a strong fourth quarter to end the financial year, with a more promising outlook for the coming year including:

Strong deal pipeline:

TCS reported a strong deal pipeline of $9.2 billion (up 35% q-o-q), the highest ever TCV in a quarter. Infosys crossed a milestone of ₹100,000 crore in revenue in FY21 with a large deal pipeline of $2.1 billion. Wipro reported its best quarterly results in nearly a decade in the March quarter with a large Deal TCV of $1.4 billion.

CC Q-o-Q Revenue Growth

TCS reported a 4.2% growth strongest in last nine years with Infosys and Wipro also reporting an uptrend with a growth if 2.0% and 2.7%, respectively.

EBIT/Operating Margin Expansion Q-o-Q

TCS reported expansion of 23 bps to 26.8% strongest in last five years. Wipro and Infosys reported a decline of 94 bps and 64 bps in margins to 24.5% and 21.0%, respectively. The margin decline was primarily driven by salary hikes. In case of Infosys higher subcontracting costs and higher attrition was also a key driver for higher costs.

Headcount and Attrition

Increased Headcount across all companies with TCS reporting an all-time low attrition of 7.2%, while it increased for Wipro and Infosys. TCS reported highest headcount increase in a quarter, with Infosys and Wipro also reporting an uptrend in headcount.

Overall, companies continue to offer increments. Wipro announced an offering of skills-based bonuses, salary hikes for senior leaders in June, and promotions across the organization and expects to hire over 18,000 freshers during the year.

Guidance

TCS – Management optimistic on overall demand scenario on track to achieve double-digit growth in FY22

Infosys – Expects to grow to grow 12-14% in the year ahead; the company was targeting margins of 22% to 24% for the full year 2021-22

Wipro - 1Q22 organic revenue guidance of 2-4% CC QQ (setting expectation for a double-digit growth Y-o-Y)

.. with digital transformation and cloud being the key trends….

Digital Transformation to lead the sector in FY22

“Our investments over the last decade in building newer capabilities, and in research and innovation, position us well for the multi-year technology services opportunity ahead. While we continue to dominate in our traditional areas of strength, we are making good progress in gaining share in the growth and transformation opportunity. Our focus going into FY 22 will be to engage with clients in their growth agenda, propelled by innovation and leverage of collective knowledge.” Rajesh Gopinathan, Chief Executive Officer and Managing Director – TCS

“A strong momentum exiting FY21, alongside a focused strategy to accelerate client digital journeys, gives us confidence for a stronger FY22” Salil Parekh, CEO and MD - Infosys

The rise of the cloud continues

Cloud is at the centre of customer conversations. Cloud is, in fact, becoming the computing platform for a large percentage of infrastructure and applications in the future, Whether the conversation is focused on cloud migration, or cloud native applications on multi hybrid public or private cloud, customers are seeking Wipro's partnership in cloud to help them shift their operating models, as well as for innovating across the enterprise value chain.” Thierry Delaporte, CEO - Wipro

 

…Setting a positive outlook for FY22

A good demand environment driven by demand for core transformation/ modernization; new technologies, acceleration in cloud adoption is a good representation of the positive demand outlook. Positive commentary from TCS, Infosys and Wipro along with strong signings led by DX mega-trend including cloud, data, and experience; and cost take-out are expected to drive double-digit growth in FY22. War on talent will intensify investment in talent to retain employees which seems to be the other key theme for FY22 for companies to make sure that supply does not slow down the pace of growth. Overall, the top three have set a tone, we expect a similar outlook for other companies taking forward this growth momentum for the sector in FY22.

 

 

 

 

 


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Neha Jain
Senior Analyst

Neha Jain

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