India’s IT Industry Continues Upward Momentum in Q3 FY18-19

By Leena Kanickaraj

Category:
ARC Report Abstract

Summary

India’s IT industry continues its upward momentum as most of the information technology (IT) services companies covered in the report exhibited above-average growth.  In this report, we analyze the revenues of India’s IT services sector for the third quarter of financial year 2018-19 and compare these with the same period the previous year.

This report discusses the financial results of the top 19 India-based IT companies listed on the National Stock Exchange (NSE), Bombay Stock Exchange (BSE), or both.  We believe this Insight provides a representative sample of India’s IT market.  The suppliers included in this report recorded combined quarterly revenue of $15.2 billion, representing 7.4 percent year-over-year growth rate.  Only three out of the 19 companies reported year-over-year decrease in software or product revenues, while the rest showed growth in Q3.  The rupee depreciated by 7 percent during the quarter compared with the same period last year.

Supplier Revenues from India’s IT Industry

India’s IT industry India%E2%80%99s%20IT%20Industry%20Continues%20Upward%20Momentum.JPGThis ARC Advisory Group report discusses the most recent quarterly revenue results of the major publicly traded IT services companies based in India.  We translated financials reported in Indian rupees to US dollars using an average exchange rate for the given reporting period.  Owing to this translation, some companies may show negative growth.  The suppliers’ reporting period for this analysis is the quarter ending in December unless stated otherwise.  We have considered the consolidated revenues for all vendors, including subsidiaries’ revenues, except for Wipro, for which we only considered IT products and services.

3i Infotech reported total revenue of $44.03 million for the quarter ending December 31, 2018.  This represents a growth of 20 percent compared with the same period prior year.  Ninety-five percent of 3i Infotech’s revenues came from “IT Solutions” (software products & services, software development, consulting, and IT infrastructure services) and the rest from “Transaction Services” (IT-enabled services). 

Cyient reported revenue of $165.1 million for the quarter ending December 31, 2018.  The revenues were up by 8.6 percent year over year.  Geographically, revenues from the Americas contributed 54.1 percent, EMEA 22.1 percent, while APAC and other contributors were 23.8 percent. Industry-wise, 38.6 percent from aerospace & defense; 10.5 percent from transportation; 9.4 percent from industrial, energy & natural resources. From the business unit perspective, 4.1 percent from semiconductor; 3.5 percent from medical & healthcare; 13.2 percent from utilities and geospatial; and 20.7 percent from communications in this quarter.  Total employee strength was 14,532 at the end of this quarter. Cyient has added 30 new customers in this quarter.

HCL Technologies achieved total revenue of $2.2 billion for the second quarter, representing a 10.8 percent year-over-year growth rate. Industry application services contributed 37.5 percent, infrastructure services 39.8 percent, business services 4 percent, and engineering and R&D services 18.6 percent in this quarter.  Geographically, 64.4 percent of revenues came from the Americas, 28.2 percent from Europe, and 7.3 percent from the ROW.  Vertically, manufacturing contributed 17.7 percent to the growth of HCL, and financial services 21.6 percent.  Life sciences & healthcare contributed 13 percent, retail & CPG 10.2 percent, public services contributed 9.7 percent, telecommunications 9.2 percent.  The total employee count in HCL was 132,328 in this quarter. 

Hexaware Technologies reported a total of $176.1 million revenues, representing 12.8 percent growth over the same quarter prior year.  Geographically, the Americas contributed 76.7 percent; Europe contributed 12.9 percent and APAC contributed 10.4 percent in this quarter. Vertically, banking and financial services (the largest focus vertical for Hexaware) contributed 42.8 percent; manufacturing, consumer, and other 15.3 percent; healthcare and insurance 17.8 percent; and travel and transportation 11.1 percent.  Segment-wise, application development & maintenance (ADM) contributed 35.9 percent to the revenues, enterprise solutions 10.1 percent, quality assurance and testing services (QATS) 18.1 percent, business intelligence & analytics 13.8 percent, business process services (BPS) 7.2 percent, and infrastructure management services (IMS) 14.9 percent. Hexaware’s employee count including trainees during the quarter stood at 16,205

Infinite Computer Solutions reported total revenue of $110 million for the quarter ending December 31, 2018.  This represents an increase of 1.5 percent from the same period last year. Vertically, telecom & media – contributed 29.1 percent, technology a major contributor to Infinite revenues - contributed 45.1 percent, healthcare 20.9 percent, BFSI 0.9 percent, and others 4 percent.  Segment-wise, Technology Solutions contributed 83.2 percent, mobility 9.5 percent, and product engineering services 7.3 percent.  Geographically, US was the major contributor representing 88.2 percent of revenues, India 7.4 percent, APAC 4 percent, and Europe 0.4 percent.  Total employee strength was at 5,077 at the end of the quarter. Infinite added 11 new clients in this quarter.

Infosys reported $2,987 million revenues for the quarter ended December 31, 2018.  This represents 8.4 percent growth over the same period the prior year.  Infosys and its subsidiaries added 101 customers during the period.  Vertically, 32.5 percent of revenues came from insurance banking and financial services; 17.4 percent from manufacturing & hi-tech; 22.6 percent from retail and life sciences; and 24.7 percent from energy, utilities, and communication and services, and 2 percent contributed by others.  By service offering, business IT services contributed 94.5 percent; products, platforms, and solutions 5.5 percent.  Geographically, 60.4 percent of revenues came from North America, 24.2 percent from Europe, 2.6 percent from India, and 12.8 percent from ROW.  Infosys and its subsidiaries had a total headcount of 225,501 employees at the end of this quarter.

KPIT reported revenue of $149 million for the quarter ended December 31, 2018.  This represents a growth of 5.5 percent year over year.  Geographically, the Americas contributed 59.27 percent, Europe contributed 26.44 percent, and ROW 14.30 percent.  Vertically, automotive and transportation recorded 50.44 percent, manufacturing 25.93 percent, energy and utilities 16.73 percent, and others 6.89 percent.  Segment-wise, integrated enterprise solutions represented 23.78 percent of revenues, product auto and engineering services 43.20 percent, products & platforms 3.96 percent, SAP practice 14.28 percent, and digital transformation (enterprise solutions) 14.78 percent.  The company added three new customers during the quarter, with total headcount of 13,584 employees at the end of December 31, 2018.

Mindtree reported revenue of $251.5 million for the quarter.  This represents 17.4 percent year-over-year growth in revenue.  Geographically, 73.4 percent revenues came from the Americas, 18.7 percent from Europe, 3.6 percent from India, and 4.2 percent from ROW.  Vertically, 39.4 percent of revenues came from technology, media and services; 21.7 percent from BFSI; 22.3 percent from retail, CPG, and manufacturing; and 16.7 percent from travel & hospitality.  Among service offerings, application, development contributed 50.7 percent, infrastructure and support 23.4 percent, independent testing 12.8 percent, consulting 3.2 percent, and package implementation 9 percent.  Finally, IP-led revenue contributed 0.8 percent.  The company added 23 new clients in this quarter.  The company’s employee strength was 19,908 at the end of December 31, 2018.

NIIT Technologies reported revenue of $32.7 million for the quarter ended December 31, 2018.  This represents a growth of 1.2 percent from the prior year.  Geographically, revenues from the Americas contributed 49 percent, EMEA contributed 33 percent, and ROW contributed 18 percent.  Vertically, banking, insurance and financial services contributed 15 percent, and insurance contributed the major revenue with 30 percent; travel & transportation 26 percent; and other contributed 29 percent.  Segment split is as follows – application development and management contributed 68 percent, business process outsourcing 4 percent, management services 18 percent, system integration and package implementation 4 percent, and IP assets 6 percent.  In Q3, the company added 10 new customers to its client list. The headcount was 10,144 at the end of this quarter.

Persistent Systems reported revenue of $120.8 million for the quarter ended December 31, 2018.  This represented decline of 1.4 percent compared with the previous year.  Services contributed 75 percent while the IP-led business contributed to 25 percent of Persistent’s business.  Segment-wise, infrastructure and systems contributed 41.9 percent to the total revenues, digital 22.9 percent, alliance 29.4 percent, and accelerate 5.8 percent.  Geography-wise, North America contributed 83.7 percent, Europe 7.6 percent, India 6.8 percent, and ROW 1.9 percent.

Ramco reported revenue of $20.3 million with a growth of 2.8 percent in this quarter.  Majority of Ramco’s revenue came from markets outside India.  The company recorded an upward growth in this quarter.

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Keywords: IT (Information Technology), IT Services, Quarterly Supplier Revenues, Software Development, Business Process Outsourcing (BPO), ARC Advisory Group.

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