India’s IT Sector Continues Upward Momentum in Q3 FY19-20

By Leena Kanickaraj

Category:
ARC Report Abstract

Overview

India’s information technology (IT) services industry continues its upward momentum as most of the 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 2019-20 and compare these with the same period the previous year.

This report discusses the financial results of the top 17 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 $16.1 billion, representing 7.3 percent year-over-year growth rate.  Only five out of the 17 companies reported year-over-year decrease in software or product revenues, while the rest showed growth in Q3.  The rupee depreciated by 2.4 percent during the quarter compared with the same period last year.

Supplier Revenues

This 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.

India’s IT sector

3i Infotech reported total revenue of $40.3 million for the quarter ending December 30, 2019.  This represents a decrease in growth of 8.5 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 $155.2 million for the quarter ending December 31, 2019.  The revenues were decreased by 6 percent year over year.  Geographically, revenues from the Americas contributed 56.8 percent, EMEA 25.1 percent, while APAC and other contributors were 18.1 percent. 34.8 percent from aerospace & defense; 10.1 percent from transportation; 14.5 percent from industrial, energy & natural resources.  From the business unit perspective - 4.4 percent from semiconductor; 4.5 percent from medical & healthcare; 9.4 percent from Portfolio; and 22.2 percent from communications in this quarter.  Total employee strength was 14,472 at the end of this quarter.  Cyient has added 13 new customers in this quarter.

HCL Technologies achieved total revenue of $2.5 billion for the second quarter, representing a 15.5 percent year-over-year growth rate. Industry application services contributed 13.1 percent, IT and business services contributed 70.2 percent, engineering and R&D services 16.7 percent in this quarter.  Geographically, 62.8 percent of revenues came from the Americas, 29.2 percent from Europe, and 8 percent from the ROW.  Vertically, manufacturing contributed 20.9 percent to the growth of HCL, and financial services 21.6 percent.  Life sciences & healthcare contributed 12.2 percent, retail & CPG 10.3 percent, public services contributed 10.9 percent, telecommunications 9 percent.  The total employee count in HCL was 149,173 in this quarter. 

Hexaware Technologies reported a total of $214.3 million revenues, representing 21.7 percent growth over the same quarter prior year.  Geographically, the Americas contributed 74.4 percent; Europe contributed 17.5 percent and APAC contributed 8.1 percent in this quarter. Vertically, banking and financial services (the largest focus vertical for Hexaware) contributed 35.5 percent; manufacturing & consumer contributed 18.2 percent, healthcare and insurance 21 percent; and professional services contributed 15 percent.  Segment-wise, application development & maintenance (ADM) contributed 40.4 percent to the revenues, enterprise solutions 9.2 percent, digital assurance 15.6 percent, business intelligence & analytics 10.6 percent, business process services (BPS) 8.4 percent, and infrastructure management services (IMS) 15.8 percent. Hexaware’s employee count including trainees during the quarter stood at 19,999.

Infosys reported $3,243 million revenues for the quarter ended December 31, 2019.  This represents 8.6 percent growth over the same period the prior year.  Infosys and its subsidiaries added 84 customers during the period.  Vertically, 31.5 percent of revenues came from insurance banking and financial services; 10.3 percent from manufacturing and 7.6 percent from hi-tech; 15.3 percent from retail and 6.7 percent from life sciences; and 12.8 percent from energy, utilities, and 13 percent from communication and services, and 2.8 percent from others.  Geographically, 61.3 percent of revenues came from North America, 24.4 percent from Europe, 2.8 percent from India, and 11.5 percent from ROW.  Infosys and its subsidiaries had a total headcount of 243,454 employees at the end of this quarter.

KPIT-Birlasoft reported revenue of $117 million for the quarter ended December 31, 2019.  This represents a decrease of 21.5 percent year over year.  Geographically, the Americas contributed 79.6 percent, Europe contributed 10.6 percent, and ROW 9.8 percent.  Vertically, automotive and transportation recorded 13.5 percent, manufacturing 17.4 percent, energy and utilities 18.3 percent, retail 12.4 percent, life sciences 19.6 percent.  Segment-wise, integrated enterprise solutions represented 32.6 percent of revenues, SAP practice 16.8 percent, and digital transformation (enterprise solutions) 27.7 percent, application development 13 percent, and others contributed 9.9 percent.  The total headcount was 10,129 employees at the end of December 31, 2019.

Mindtree reported revenue of $275.2 million for the quarter.  This represents 9.4 percent year-over-year growth in revenue.  Geographically, 74.6 percent revenues came from the Americas, 17 percent from Europe, 4 percent from India, and 4.4 percent from ROW.  Vertically, 41.5 percent of revenues came from technology, media and services; 21.3 percent from BFSI; 20.6 percent from retail, CPG, and manufacturing; and 16.6 percent from travel & hospitality.  The company added 23 new clients in this quarter.  The company’s employee strength was 21,561 at the end of December 31, 2019.

NIIT Technologies reported revenue of $51.4 million for the quarter ended December 31, 2019.  This represents a growth of 11.2 percent from the prior year.  Geographically, revenues from the Americas contributed 48 percent, EMEA contributed 37 percent, and ROW contributed 15 percent.  Vertically, banking, insurance and financial services contributed 16 percent, and insurance contributed the major revenue with 30 percent; travel & transportation 29 percent; and other contributed 25 percent.  Segment split is as follows – application development and management contributed 73 percent, business process outsourcing 3 percent, management services 16 percent, system integration and package implementation 2 percent, and IP assets 6 percent.  In Q3, the company added ten new customers to its client list. The headcount was 10,849 at the end of 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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