August 2023 is a lucrative month for Tata Consultancy Services, Infosys and HCL Tech.
Equity research firm BNP Paribas noted the green shoots in a report: “Deal win announcements in the IT services sector were slightly higher than last month. The three-month rolling average of deal signings has declined slightly. In recent weeks, large wins have Deals have increased significantly. This reassures us about a recovery in FY24 and a strong recovery in FY25, driven by an increase in large cost-optimized deals and a bottoming out of macroeconomic concerns.”
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Globally, the IT industry has reported 13 major deals, with North America (6) reporting the most announcements, followed by Europe (5) and Rest of the World (2). Most deals are focused on the cloud, automation and artificial intelligence (AI) sectors.
Indian IT companies HCLT (4) and TCS (3) were the most active companies over the past month. Companies like HCLT-Verizon, TCS Athora and DXC-Jollibee Foods won some key deals
“Among the major deals announced, INFO secures $2 billion in deals from existing strategic customers to bring AI-powered digital entertainment to customers around the world. HCLT announces it will be Verizon’s first provider of network deployments for enterprise customers worldwide The six-year contract has a total value of $2.1b. We continue to believe technology demand should be relatively resilient, as reflected in the recent large deal signings.” reports added.
Does this mean that the IT industry’s woes are finally easing? An ICRA report released around the same time projected modest revenue growth of 3-5% in US dollar terms (for its sample set) in FY24, down from about 9.2% year-on-year growth in FY23 as the market continues to There is uncertainty. critical markets, leading to suspension and postponement of non-critical projects and slowdown in discretionary IT spending in key sectors such as BFSI, retail, technology and communications.
Additionally, operating margin (OPM) is expected to decline by 70-100 basis points in the FY24 sample set due to lower operating leverage.