Comments
The top three Indian IT firms, Tata Consultancy Services, Infosys and HCL Tech, reported a significant de-growth in net client additions in FY23. According to data provided by CareEdge, the top three Indian IT companies saw a 26 per cent reduction in net client addition. For client engagements of more than $1 million, the three IT majors added 285 new clients in their roster in FY23, versus the addition of 387 new clients (in net) in FY22.
This data comes amid the overall poor innings by the top IT giants in Q4 FY23. Revenues and margins of the top IT majors took a significant beating in the January-March quarter on the impact of the banking crisis in the US. IT firms are beginning FY24 on a sour note as major macro uncertainties loom.
For most of FY23, IT companies were battling with major macroeconomic pressures, from recession fears to the European energy crisis, to the latest banking crisis in the States. However, throughout the year, the top brass for the IT companies have maintained that the strong deal pipeline for these firms is going to be their saving grace. As IT companies tread uncertainly into the upcoming financial year, they continue to indicate that their robust deal pipeline will carry them through the crisis.
However even with the likelihood of strong future demand, the net client additions by IT firms have reduced significantly in FY23 versus FY22. Moreover, the reduction has happened across all segments. In the $1 million and above category, the net client additions fell by 20 per cent to 185 new clients (in net) acquired by the top 3 Indian IT firms in FY23. In the $10 million and above category the reduction was even higher at 37 per cent (66 new clients in net). The $100 million and above vertical saw the largest de-growth, only 7 news clients were added in in FY23, a 68 per cent reduction from FY22.
Deal wins
Experts indicated that the reduction in new clients might not necessarily correlate with overall reduction in deal wins. Pareekh Jain, IT analyst, said that top IT firms are focussing on existing clientele for future business and growth opportunities. “IT companies are looking at existing clients to secure larger deal wins, rather than adding more clients to their roster. This could explain why the overall client additions have been low for the 2023 fiscal,” he said.
Swati Singh, Analyst at CareEdge, added: “There has been a slowdown in large ticket size client addition (greater than $1 million segments), an implied higher base effect on account of a sudden post-pandemic ramp-up in FY22. While the sector dynamics continue to remain intact, uncertainties arising from high inflationary and recessionary environment, especially in the markets of the US and Europe, could potentially play spoilsport with respect to discretionary IT spending by corporates and remain the key monitorable.”
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.