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Shifting Gears in the Tech Industry
Shifting Gears in the Tech Industry

November 14, 2024

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The period ending September is also the closing of first half of the year for Indian Tech Companies. 3 Key Trends are coming out of the earnings transcripts, Continued Demand improvements in BFSI Vertical, Headcount Growth, Growing deals and AI/Gen AI engagements.

  1. Continued Demand improvements in BFSI Vertical

BFSI has the highest contribution to the revenues of most of the IT companies. LTIM & Mphasis have significant exposure to BFSI segment at 35% and 59% respectively. BFSI has seen continued growth momentum where discretionary spending is particularly increasing in Capital Markets, Mortgages and card and payments sub sections. Improvements are particularly linked to regulatory compliances; others point out that some of the projects that were put on hold before are resuming. HCLTech’s BFSI grew sequentially, Wipro’s America SMU Strategic Market Unit grew by 0.8%. LTIM has signaled for increased momentum in deals.  There is still no visibility of large transformation programs that are visible in BFSI segments but the results of large banks in US definitely looks strong. Gen AI is anticipated to drive further growth in this segment. Companies are increasingly working to augment its BFSI capabilities looking at the strong growth outlook of the vertical. For examples, L&T Tech Services signed an agreement to acquire California based Intelliswift for a total consideration of $110 million. Similarly, Persistent Systems is acquiring select assets from SoHo Dragon which is into consulting and staffing primarily to BFSI customers for a sum of $4.7 million.

  1. Headcount growth

Although there was a declining trend in headcount growth, 5 Companies, TCS, Infosys, Wipro, Tech Mahindra and LTIM has collectively hired 17500 employees. HCL decreased because of disinvestment. Infosys is optimistic about fresher hiring of 15k-20k in FY2025 and has added ~2,500 employees sequentially after 6 weak quarters. LTIM has also onboarded 1500+ freshers as well. TCS has also increased its headcount by 5726 nos.

  1. Growing deals and AI/Gen AI engagements

The pipeline of large deals is increasing as stated by Infosys. Also, TCS says that TCV of AI /Gen AI deals are almost doubling every quarter. TCS engagements in Gen AI have increased from 270 to 600. Out of which 86 engagements have gone into production stage from 8 production stage last quarter. Accenture Gen AI booking increased from 900Mn to 1 Bn. Infosys saying almost every large or significant deal has Gen AI components in It. LTIM also said that it won the largest deals in history due to AI approach. HCLTech states that its pipeline of deals is almost near the all-time high. The total new booking TCV for HCLTech stands for Q2 stands at $2.2 billion with a good mix of small and large deals.

 


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Madhumay
Deputy Manager - Research

Comment

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The shift in the tech industry, highlighted by growth in BFSI and AI-driven deals, shows an exciting transition. As AI and Gen AI become central to large deals, it’s clear the future is not just about more tech, but smarter, more strategic investments. The increasing headcount growth reflects this demand for talent and innovation.

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