IANS | 18 Mar, 2024
The revenue growth of the Indian IT services industry is expected to
improve mildly from 2 per cent in the nine months of the current fiscal
year but remain modest at 3-5 per cent in FY2025, a new report showed on
Monday.
Despite expectations of modest revenue growth, credit rating
agency ICRA maintained its stable outlook on the Indian IT services
industry, “led by a well-established business position, expectations of
healthy earnings and cash flow generation, and strong balance sheets of
the industry players.”
“The banking, financial services and
insurance (BFSI) and telecom segments have contracted more than the
others. Nonetheless, critical spending and cost optimisation deals
continue to gain traction, supporting the growth prospects for the
Indian IT services companies to some extent,” said Deepak Jotwani,
Assistant Vice President and Sector Head, ICRA.
ICRA expects a likely pick-up in the growth momentum once the macroeconomic headwinds subside.
The
credit rating agency also expects hiring to remain muted in the near
term with gradual pick-up until the growth momentum improves.
“Moreover,
attrition levels are expected to stabilise over the near term, inching
closer to the long-term average of 12-13 per cent, as overall slowdown
in growth momentum and strong hiring in the previous fiscal has
corrected the demand-supply mismatch witnessed earlier,” Jotwani noted.
The
Indian IT services industry continues to have a net cash surplus
position with strong liquidity owing to high level of operating cash
flows and modest capex and working capital requirements.
