Indian IT’s big four — Tata Consultancy Services (TCS), Infosys, Wipro and HCL Tech — built on their growth momentum with increase in net profits during the October-December quarter.
All four beat market expectations as client firms increased their discretionary IT spend — an indication of a client firm’s IT spending pattern, which can further translate into outsourcing deals.
“There are signs that discretionary IT spend is going up for certain sectors such as the BFSI (banking, financial services and insurance), retail, consumer goods and for some business verticals like analytics and digital,” said Ankita Somani, an IT analyst at brokerage firm Angel Broking.
This, in fact, must be music for the “big four” Indian IT firms since BFSI continues to offer maximum outsourcing deals and digital systems is the emerging business vertical.
Wipro chairman Azim Premji explained that the global economy was progressing towards stability and there was an optimism among its client firms.
Infosys, which had been struggling to cope with the exit of senior management executives over the last two quarters, managed to come back on track with handsome rise in its income figures. The company also raised its revenue outlook for 2013-14 by a notch to 11.5 to 12% from 9 to 10% earlier.
TCS, the largest software exporter of India, also upped its total hiring target to 55,000 from the earlier 50,000. HCL Tech, too, said that the demand environment for IT services has been improving constantly and discretionary IT spend is gaining momentum.
However, analysts said that the fourth quarter of 2013-14 (from January till March) might be slightly weaker.
“It is during these months that the client firms ready their IT budgets for the rest of the year. So, in relative terms this is a weaker quarter,” said Dipen Shah an IT analyst at brokerage firm Kotak Securities.
He added that if the US government brings in the Immigration Bill then probably there might be some concerns for IT firms.