India’s IT Industry Slows Down in Q1 2020-21

Overview

India’s information technology (IT) services industry slowed down in Q1 FY 2020-21 as most of the IT services companies covered in the report exhibited below-average growth.  In this latest report, we analyze the revenues of India’s IT services sector for the first quarter of financial year 2020-21 and compare these with the same period the previous year. 

This report discusses the financial results of the top 18 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, reflecting a 4.1 percent year-over-year decline.  Thirteen out of the 18 companies reported a year-over-year decrease in software or product revenues, while the rest showed growth in Q1.  The rupee depreciated by 7.8 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 June 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 $32.05 million for the quarter ending June 30, 2020.  This represents a decrease of 21.1 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 $130.6 million for the quarter ending June 30, 2020.  The revenues declined by 16.6 percent year over year.  Geographically, revenues from the Americas contributed 68.3 percent, EMEA 31.3 percent, while APAC and others contributed 31 percent.  From the business unit perspective, contributors were – 35 percent from aerospace & defense; 13.4 percent from transportation; 13.2 percent from industrial, energy & natural resources; 6.2 percent from semiconductor; 3.1 percent from medical & healthcare; 11.3 percent from portfolio and others; and 30 percent from communications.  Industry-wise, revenue was 47.6 percent from aerospace and defense, 14.5 percent from energy and utilities, 7.4 percent from medical, 30.1 percent from communications, 11.3  percent from portfolio, 13.5 percent from transportation, and 6.2 percent from others.  Cyient has added 20 new customers in this quarter.

HCL Technologies achieved total revenue of $2.3 billion for the first quarter, representing a marginal decrease in the growth by 0.3 percent.  Industry application services contributed 70.2 percent on IT and business services, engineering and R&D services 16 percent, and products & platforms contributed 13.8 percent in this quarter.  Geographically, 63.7 percent of revenues came from the Americas, 28.3 percent from Europe, and 8 percent from ROW.  Vertically, manufacturing contributed 18.1 percent and financial services 22.4 percent and technology services contributed 17.2 percent and life sciences & healthcare contributed 13.7 percent, retail & CPG 10 percent, public services contributed 11 percent, and telecommunications 7.6 percent.  The total employee count in HCL was 150,287 in this quarter. 

Hexaware Technologies reported a total of $210.6 million revenues, representing 17 percent growth over the same quarter prior year. Vertically, banking and financial services (the largest focus vertical for Hexaware) contributed 36.8 percent; manufacturing, consumer 17.5 percent,  healthcare and insurance 20.1 percent; and travel and transportation 9.9 percent; and professional service contributed 15.7 percent.  Geographically, 74.2 percent of the revenue came from the Americas, 17.8 percent from Europe, and 8 percent from Asia Pacific.  Segment-wise, application development & maintenance (ADM) contributed 42.5 percent to the revenues, enterprise solutions 8.3 percent,  (DA) 15.9 percent, business intelligence & analytics 11.4 percent, business process services (BPS) 8.5 percent, and infrastructure management services (IMS) 13.4 percent.  Hexaware’s employee count including trainees during the quarter stood at 19,998.

Infosys reported $3,121 million revenues for the quarter ended June 30, 2020.  This represents marginal decrease of 0.3 percent over the same period the prior year.  Vertically, 31.5 percent of revenues came from insurance, banking and financial services; 9.5 percent from manufacturing; and 8.7 percent from hi-tech; 14.3 percent from retail; and 6.7 percent from life sciences; and 12.8 percent from energy, utilities, resources & services; and 13.4 percent from communication; and 3.1 percent from others.  Geographically, 61.5 percent of revenues came from North America, 24 percent from Europe, 2.9 percent from India, and 11.6 percent from ROW.  Infosys and its subsidiaries had a total headcount of 239,233 at the end of this quarter.

KPIT-Birlasoft reported revenue of $121.2 million for the quarter ended June 30, 2020.  This represents a growth of 8.5 percent year over year.  Geographically, the Americas contributed 74.6 percent to KPIT’s Q1 revenues, Europe 14.9 percent, and ROW 10.5 percent.  Vertically, the main contributors were manufacturing 38.4 percent, energy and utilities 15.5 percent, BFSI 17.4 percent, life sciences 28.8 percent.  Segment-wise, integrated enterprise solutions represented 31.6 percent of revenues, SAP practice 13.5 percent, and digital transformation (enterprise solutions) 26 percent, CAD 11.5 percent and others contributed 17.4 percent.  The company added 22 new customers during the quarter, with total headcount of 9,908 employees at the end of June 30, 2020.

Mindtree reported revenue of $253.2 million for the quarter.  This represents decline by 4.2 percent year-over-year.  Geographically, 79 percent revenues came from the Americas, 13.1 percent from Europe, 4.1 percent from India, and 3.8 percent from ROW.  Vertically, 51 percent of revenues came from technology, media and services; 220.3 percent from BFSI; 20.6 percent from retail, CPG, and manufacturing; and 8.1 percent from travel & hospitality.  Among service offerings, application, development & maintenance, contributed 37 percent, infrastructure and support 28.7 percent, independent testing 15.5 percent, and package implementation 5.5 percent.  The company’s employee strength was 21,955 at the end of June 30, 2020.

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