India's IT services industry is on track to meet the expectations of double-digit growth guidance for FY22, according to a quarterly industry report by Nasscom.
The industry revenues grew 4.5 per cent q-o-q and 17.8 per cent y-o-y, with digital and cloud remaining the major drivers. Digital revenues increased 10.2 per cent sequentially, and the share of digital (of select companies) rose to 56.6 per cent of total revenues during the July-September quarter.
But net margins continued to decline sequentially, primarily driven by salary hikes, new hires, increased sub-contracting costs as well as travel and facility costs. This quarter, y-o-y margins also declined as talent availability continues to put pressure on hiring, retaining and sub-contracting costs. "Net client addition maintained a positive trend with most companies witnessing new additions during the quarter. Revenue per client continued to increase on a sequential basis supported by high growth in revenues," the report said. Talent availability driven by increased attrition remains a key challenge that companies continue to address as a priority.
Employee count increased 5.3 per cent q-o-q; and was up 17.5 per cent y-o-y as hiring remained the key strategy to counter talent availability. Also, as the demand environment remains healthy, companies’ plans to hire more in the next few months of 2021.
"Attrition maintained its uptrend reaching 19.3 per cent this quarter, up from 17.5 per cent last quarter. This increase continues to be driven by the rising demand for new-age digital skills across industries. Companies continue to counter this trend through increased fresher hiring and focusing on reskilling and upskilling their current workforce," Nasscom said