IT industry expected to rise modestly for the second year in a row: Report
According to Crisil ratings, the IT services industry is expected to have a second straight year of slow growth this fiscal year, with revenue expected to rise by 5-7 percent as ongoing global macroeconomic challenges cause a moderate increase in technology spending in the important US and European markets.
This comes after an anticipated 6% on-year rise for the preceding fiscal year and a 12% compound annual growth for the ensuing ten years, through 2023–2024.
Nonetheless, the operating margin would remain stable at 22–23% because of the careful control of labor expenditures, which account for 85% of total spending and include subcontracting costs. This is achieved by judicious recruiting, decreased attrition, and lower replacement prices.
That much is evident from a Crisil Ratings analysis of the top 24 companies, which accounted for 55% of the sector’s sales of Rs 14 lakh crore in the previous fiscal year. The banking, financial services, and insurance (30%), retail (15%), technology (10%), and communications and media (10%) industries make up 65 percent of the Indian IT services industry’s income.
“The slowdown in technology spend will continue this fiscal year, weighing on the revenue growth of IT service providers,” said Aditya Jhaver, Director of CRISIL Ratings.
