BENGALURU: As clients are still watchful of macroeconomic factors, the near-term demand environment for IT services firms is still challenging and companies are struggling to close mega deals.
Tata Consultancy Services’ (TCS) order book for Q3 stood at $8.1 billion. Its order book in the previous quarter was $11.2 billion. Analysts pointed out the near-term demand environment remains challenging.
Infosys has tweaked FY24 revenue guidance for the third time to 1.5-2% against 1-2.5% it had projected during the September quarter. Its large deal for the quarter stood at $3.2 billion. HCLTech too narrowed its full-year growth guidance. It is going to see 5-5.5% growth guidance against 5-5.5% it projected earlier. CEOs of top IT firms recently said clients are still making conservative investments. Wipro’s large deals TCV for Q3 was over $900 million.
“The demand environment overall remains cautious. Clients are still making conservative investments, looking for efficiency, more returns on investment, and better optimisation of existing investments. But we are seeing some indicators for growth,” Wipro CEO and MD Thierry Delaporte said after announcing the company’s Q3 earnings.
On macroeconomic headwinds that still continue, K Krithivasan, CEO and MD, TCS, said the situation has not changed and that sentiments are the same. However, IT firms said in Q3 it bagged many AI deals. Krithivasan said they are seeing tremendous interest in Generative AI and that four production deployments have happened in Q3. Last week, TCS announced it has strengthened its AI readiness across its value chain. It also launched an AI Experience Zone, to foster hands-on proficiency in AI and Gen AI for its employees.
Wipro is working with a global healthcare insurer to develop a GenAI-powered knowledge research solution to transform their contact centre. “AI is moving from curiosity and experimentation stage to becoming vital to business strategy,” Wipro CEO said.
Three IT firms - TCS, Wipro and Infosys - have reduced their workforce by 16,254 cumulatively in Q3. HCLTech has added 3,818 freshers for Q3.
Sachin Alug, CEO, NLB Services, said, “Owing to the impact of ongoing macro-economic challenges, Q3 performance of leading IT firms indicated a subdued growth. The headcount of major IT players continued to fall in Q3, posing concerns, particularly for freshers, as several IT firms are either abstaining from campus hiring or adopting a restrained hiring approach.”
IT firms’ Q3 performance
Wipro’s revenues in Q3 dropped 4.4% YoY to `22,205 cr TCS’ order book in Q3 was $8.1 billion HCLTech TCV was at $1,927 mn HCLTech LTM attrition in Q3 was at 12.8% Infosys headcount in Q3 reduced by 6,101 employees Infosys large deal in Q3 stood at $3.2 billion