Contrary to the macroeconomic situation, the top four IT companies saw some recovery in IT deals. On a quarter-on-quarter level, client additions increased across every deal size category. However, client additions in Q3FY23 are still lower than additions in Q3FY22.

According to the data provided by CareEdge, the top four IT companies namely, Tata Consultancy Services (TCS), HCL, Infosys and Wipro added 81 new clients in the + $1 million band, 19 new clients in the +$10 million band, 11 new clients in the +$50 million band and 4 new clients in the $100 million category, in Q3FY23. The recovery in the large deal category is especially notable, especially as the IT companies lost four clients in this category in the previous quarter. 

Number of client additions is still low at a year on year level, in Q3FY22 last year, the client additions were as follows. 116 new clients in the +$1 million segment, 28 new additions in +$10 million band, 10 new clients in the +50 million category and 8 new client additions in the large deal category in the +$100 million category. 

Predicting recession

After the precipitous drop in client additions in Q4FY22, IT companies have been increasing the number of client additions in each quarter. However, as the threat of financial crisis looms, IT companies warn that there will be a slowdown of deals in the western markets, especially Europe. IT companies predict recession in the UK and the States to be short lived for the most part. 

Top executives are also reporting consumer facing industries such as retail and aviation exercising caution while striking new IT deals. This is because these businesses will be the first to be affected by a financial crisis. 

Companies such as TCS report that most of the new business is being driven by the cloud and communication segment. With digital transformation becoming ubiquitous, new IT business in the cloud category is booming.