INSUBCONTINENT EXCLUSIVE:
large deal wins, but margins could come under pressure as the costs of expanding headcount in the US begin to bite.
IT companies have had to
spend more to hire people in the US and Europe and pay subcontractors where talent is scarce
strong growth from Infosys, TCS and HCL Tech and muted growth for Wipro and Tech Mahindra
note.
TCS and Infosys are set to announce their fourth quarter results on April 12, kicking off the earning season for tech
companies.
Saluja expects Infosys to report 1.9 per cent constant currency revenue growth in the fourth quarter, and 1.8 per cent growth
from TCS.
He expects Wipro to grow1.5 per cent, HCL Technologies at 2.5 per cent and 1 per cent growth from Tech Mahindra.
Margins for the
defence are steadily eroding, with utilisation at reasonably high levels, Indian rupee tailwind receding and investments in the business
Infosys cut its target margin band to 22-23 per cent from 23-25 per cent to allow it room to invest in its US talent model
It has already hired over 7,500 of the targeted 10,000 US local talent, but some analysts believe the Bengaluru-headquartered company may
analyst with Motilal Oswal, said
expected to miss its target margin band of 26-28 per cent.
The market is also watching for commentary about FY20.
Macroeconomic
uncertainties around Brexit and the possibility of a US recession has led to slower spending increases in IT budgets, but larger digital
deals will help the industry protect growth rates
Analysts expect Infosys to forecast 8-10 per cent growth in FY20, and HCL Tech about 15 per cent, factoring in the closing of its product
