India’s IT Sector Decelerates in Q2 2020-21

Overview

India’s information technology (IT) services industry continues to decelerate in Q2 2020-21.  Fifty percent of the IT services companies covered in the report exhibited below-average growth.  In this report, we analyze the revenues of India’s IT sector for the second 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 $15.9 billion, reflecting 0.7 percent year-over-year marginal decline.  Nine out of the 18 companies reported year-over-year decline in software or product revenues, while the rest showed growth in Q2.   The rupee depreciated by 4.9 percent during the quarter compared with the same period last year.

Supplier Revenues for India’s IT Sector

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 September 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 $33.8 million for the quarter ending September 30, 2020.  This represents decline of 22.6 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 $135 million for the quarter ending September 30, 2020.  The revenues were down by 17.8 percent year over year.  Geographically, revenues from the Americas contributed 67.4 percent, EMEA 39 percent, while APAC and others contributed 28.6 percent. From the business unit perspective, contributors were – 30.9 percent from aerospace & defense; 16.3 percent from transportation; 13.1 percent from industrial, energy & natural resources; 6.1 percent from semiconductor; 3.5 percent from medical & healthcare; 32.4 percent from communications; and 11.9 percent from portfolio in this quarter.  

HCL Technologies achieved total revenue of $2.5 billion for the first quarter, representing a marginal growth of 0.8 percent year-over-year growth rate. Industry application services contributed 70.8 percent, infrastructure services (products & platforms) 13.5 percent, and engineering and R&D services 15.7 percent in this quarter.  Geographically, 63.1 percent of revenues came from the Americas, 28.4 percent from Europe, and 8.5 percent from ROW.  Vertically, manufacturing contributed 17.7 percent, technology & services contributed 17.3 percent, and financial services 22.1 percent.  Life sciences & healthcare contributed 14.1 percent, retail & CPG 10.4 percent, public services contributed 10.7 percent, and telecommunications 7.7 percent.  The total employee count in HCL was 153,085 in this quarter. 

Hexaware Technologies reported a total of $214.1 million revenues, representing 1.7 percent growth over the same quarter prior year.  Geographically, the Americas contributed 73.6 percent; Europe contributed 18.2 percent and APAC contributed 8.2 percent in this quarter. Vertically, banking and financial services (the largest focus vertical for Hexaware) contributed 38.2 percent; manufacturing & consumer contributed 17.3 percent, healthcare and insurance 21.7 percent; professional services contributed 14.9 percent; and travel and transportation 7.9 percent.  Segment-wise, application development & maintenance (ADM) contributed 40.3 percent to the revenues, enterprise solutions 7.9 percent, digital assurance 16.2 percent, business intelligence & analytics 12.5 percent, business process services (BPS) 8.8 percent, and infrastructure management services (IMS) 14.3 percent.  Hexaware’s employee count including trainees during the quarter stood at 19,407.

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