Indian IT industry expected to grow 3-5% revenue in 2024, lower than 2023: Report

Published 29-08-2023, 06:21 pm
© Reuters.  Indian IT industry expected to grow 3-5% revenue in 2024, lower than 2023: Report

New Delhi, Aug 29 (IANS) The Indian IT industry is expected to see moderate revenue growth of 3 to 5 per cent in FY2024, lower than 9.2 per cent (year-on-year) growth in FY2023, a new report said on Tuesday. According to the credit rating agency ICRA (NS:ICRA), key sectors like BFSI, retail, technology, and communication are expected to slow down discretionary IT spending.

The operating profit margin is expected to decline by 70-100 bps in FY2024 due to lower operating leverage.

"The operating profit margin (OPM) for the sample set is expected to decline by 70-100 bps in FY2024, due to lower operating leverage. Nevertheless, it will remain healthy at 20-21 per cent in FY2024, owing to the ability of most companies to work with multiple levers such as onshore-offshore mix, employee utilisation levels, employee pyramid optimisation, among others, to manage costs," said Deepak Jotwani, Assistant Vice President & Sector Head, ICRA.

In terms of segment-wise growth trends, the report said that BFSI and communication have tapered more than other segments. BFSI is impacted due to softness in mortgage, investment banking, capital markets and insurance segments amidst ongoing macroeconomic headwinds.

The communication vertical has been impacted because of the weakening revenue profile of telecom companies, as the investments made by the customers in 5G have not materialised meaningfully leading to the reprioritisation of its technology spending.

Moreover, the report mentioned that there has been a significant reduction in hiring by IT services companies in the last three quarters, given the slowdown in the growth momentum, coupled with utilisation of the considerable excess capacity added in FY2022 and in the first half (H1) of FY2023.

"ICRA expects lower hiring by the IT services companies in the near term because of the expected slowdown in growth and also estimates attrition to further decline over the next few quarters before stabilising at the long-term average of 13-15 per cent," Jotwani said.

In addition, the report stated that the Indian IT services industry continues to have a net cash surplus position with strong liquidity owing to a high level of operating cash flows and modest capex and working capital requirements.

--IANS

shs/ksk

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2025 - Fusion Media Limited. All Rights Reserved.