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Indian technology sector: Top 10 technology companies performance analysis in Q3FY25
Indian technology sector: Top 10 technology companies performance analysis in Q3FY25

February 25, 2025

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The Indian technology sector continues to navigate an evolving global demand environment, as reflected in the performance of the top players in Q3FY25. While long-term growth remains intact, short-term challenges persist. Let's take a closer look at key trends impacting the industry.

Revenue trends: A mixed picture

Source: Nasscom

The revenue growth of the top 10 Indian technology companies remained largely flat but grew 4.1% y-o-y in reported currency terms. The sequential flattish growth is attributed to slow discretionary spending and seasonal factors. However, the y-o-y growth signals steady recovery and resilience amid economic uncertainties.

In tandem with revenue trends, net profit margins also showed divergence. Margins declined by 10 bps q-o-q but improved by 30 bps y-o-y, indicating improved operational efficiencies over the longer term despite short-term margin pressures.

 

Gradual revival in employee base

Source: Nasscom

The net employee base saw a slight increase of 450 employees in Q3FY25. However, on a nine-month basis (9MFY25), the top ten technology companies added 22,164 employees, highest net additions since a cautious but positive shift following the reduction of 58,385 employees in the same period last year. This indicates a measured approach to workforce expansion, with companies balancing hiring with cost optimization.

 

Attrition on the rise - highest since Q3FY24

Source: Nasscom

Attrition rates have increased by 40 bps q-o-q and 30 bps y-o-y. Technology companies view it as a sign of increased demand for talent, which could indicate a broader industry recovery and growth in hiring activity.

 

Active client base continues to shrink

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Source: Nasscom

One of the key concerns for Indian tech companies is the continuous decline in active clients since Q4FY23. In Q3Fy25, active client base declined 0.5% q-o-q and -1.2% y-o-y. Clients remain cautious amid changing demand dynamics and ongoing vendor consolidation, leading to a reduced client base for select companies. This trend underscores the importance of deepening relationships with existing clients while adapting to shifting market conditions.

 

Strength in North America while weakness across key verticals due to seasonality

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Source: Nasscom

 

North America: Since the start of FY25, North America has demonstrated resilience, fueled by increasing optimism around technology investments. This positive sentiment has been driven by the U.S. presidential election outcome and recent interest rate cuts. Additionally, the proposed reduction in corporate tax rates has further bolstered business confidence. The financial services sector—particularly capital markets, mortgages, cards, and payments—has seen a rise in discretionary spending, leading to increased demand for technology services.

EMEA: In contrast, the EMEA region continues to face headwinds. Challenges in the European automotive sector, coupled with ongoing supply chain disruptions, have dampened technology spending in the region.

Key verticals:

  • BFSI: While the sector saw a slight 0.2% declineq-o-q, it maintained growth over the nine-month period, driven by strength in financial markets, especially in North America.
  • Telecom: Revenue declined by 2.7% q-o-q, impacted by rising operational expenses and reduced discretionary spending.
  • Manufacturing: The sector experienced a 3.8% decline q-o-q, primarily due to continued weakness in the automotive and aerospace industries.

 

 


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Prajwal Pandey
Research Analyst

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