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Tech Industry Insights: Q1FY25 Performance Overview
Tech Industry Insights: Q1FY25 Performance Overview

August 12, 2024

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Financial Performance

Revenue Growth Trends

 

Indian Tech Companies: Q1FY25 has marked a significant rebound for Indian tech companies, particularly driven by mid-tier firms.

  • The top 6 companies witnessed a growth of 1.1% q-o-q after a decline of -0.2% in Q4FY24.
  •  ER&D companies experienced slower revenue growth due to deal ramp-up delays, softness in the EV segment, and seasonal impacts. However, there is optimism for recovery in the coming quarters.
  • Mid-tier companies driving growth with 3.7% q-o-q and 11.7% y-o-y.

Sector and Geographic Performance

  • BFSI grew 1.5% q-o-q with signs of recovery after continuous decline since Q1FY24.
  • While Telecom grew slightly by 0.6%. Both these verticals together account for approximately 60% of the industry revenue.
  • Manufacturing vertical decreased by 0.2% q-o-q due to pressure in the European automotive sector.

Geographic Performance:

  • US Market which contributes to 62% of the industry revenues grew by 1.1% q-o-q, marking the highest growth since Q4FY23.
  • EMEA Market declined by 0.1% q-o-q due to softness in the European manufacturing sector.

 

Global Tech Companies: Global tech companies also saw revenue growth, largely fuelled by advancements in cloud computing and AI.

 

Profit Margins:

 

  • Profit after tax fluctuated for Indian tech companies as they continued to invest in emerging technologies like AI and Gen AI.
  • In contrast, global tech companies experienced a y-o-y increase of 50 basis points in net profit margins as they see prior investments in AI and cloud technologies now giving them return.

 

 

Employment Trends

 

Indian Tech

  • There has been a notable shift in net employee additions, improving from a net reduction of 11,016 in Q4FY24 to a net addition of 668 in Q1FY25.
  • This positive trend is expected to continue with companies planning to hire approximately 80,000 freshers in FY25.

Global Tech

  • Headcount grew with a net addition of 7,600 (approx.) compared to a net reduction 4000 (approx.) in Q4FY24.

 

 

Operational metrics and deal pipeline*

  • The client base for the top six companies continued to decline for the sixth consecutive quarter since Q4FY23.
  • Attrition rates stabilized at 12.7% in Q1FY25, after dropping for seven consecutive quarters since Q3FY23.
  • The deal pipeline remains robust with a Total Contract Value of USD 19.6Bn.

 

 

 

*Analysis based on top six companies including TCS, Infosys, HCLTech, Wipro, TechM, and LTIMindtree.

 

Source:

 - Nasscom

- Company website

 - https://www.newindianexpress.com/business/2024/Jul/26/it-companies-hiring-to-see-positive-traction-in-second-half

 - https://timesofindia.indiatimes.com/business/india-business/it-companies-witness-increase-in-demand-and-boost-staff-count/articleshow/111911017.cms


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Prajwal Pandey
Research Analyst

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