In the first year after the global economic crisis, the information technology (IT) sector delivered some exponential growth numbers. Most tech majors made handsome gains as overseas orders increased in number along with IT spends showing improvement.
Number crunching
While Wipro’s Q2 net profit jumped 14.4% to Rs 1,161.7 crore as against Rs 1,015.5 crore, on quarter-on-quarter basis (QoQ), its revenues increased 10.35% to Rs 6,940.2 crore versus Rs 6,289.1 crore, (QoQ).
Infosys Technologies Q2 revenues came in at USD 1,154 million for the quarter ended September 30, 2009, and a year-on-year (YoY) decline was 5.1%.
Tata Consultancy Services' Q2 FY10 consolidated net profit rose 29.21% YoY at Rs 1,642.21 crore. On a standalone basis, it reported a net profit of Rs 1,270.99 crore.
2010 forecast
However, as 2009 draws to a dramatic close, industry honchos share their opinion on how the New Year will be.
2010 should be a good year for the industry feels N Chandrasekaran, Chief Operating Officer and Executive Director at TCS. Spend in banking and financial services industry (BFSI), which accounts for the majority of Indian IT, has significantly improved and continues to lead recovery, according to him. However, “Manufacturing, telecom and hi-tech have not yet revived fully.”
Infosys too expects revenue growth in the year 2010-2011to be better than 2009-10 as a recovery in the global economy spurs investments by its clients, a senior official says.
"At this point, we do believe that there will be better growth next year than we have seen this year. We just don't know how much," says Subhash Dhar, senior vice-president and head of global sales and marketing at Infosys. "The January-March quarter will be critical because that's when the budgets will be revealed to us and we get to know the trends much better," Dhar adds.
While growth prospects seem failry positive, margins will remain under pressure. Wipro intends to hold margin in a narrow range, says its Executive Director and Joint CEO, Girish Paranjpe. “We have seen a rollercoaster all through 2009. We expect something similar to continue but hopefully in a narrower range. But what we tried to do is hedge our futures, at least in terms of foreign currency so that we have a predictable outcome.”
Further, Paranjpe says that the clients have still not finalized budgets for 2010. “But early indications, based on what a few clients have said, it seems they are looking flattish kind of budgets between 2009 and 2010.”
Hiring lull over
The IT sector had frozen hiring during most of 2009. Till July-August, lay offs in IT reached a peak.
S Ramadorai, Chief Executive Officer and Managing Director, TCS, said, "In difficult times, you ought to look at performance which is much higher that before, efficiencies, coast optimisation, building teams, coming together."
However, as the year advanced, the sector too saw better hiring prospects.
While Paranjpe feels that lateral hiring has been picking up over the last two months, Chandrasekaran is confident that recruitment targets will be higher than previous year.
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