The performance of the fourth quarter of the IT sector has raised questions | Photo credit: Istockphoto
The numbers reported by the top -level companies of India for the fourth quarter and the full year for fiscal year 2015 reiterate that they are at a turning point. Only a decade ago, the business subcontracting opportunity for Indian IT services was great, uploading and growing well. All these companies had to stay focused and mount the wave. But this is now changing as the results of TCS, Informationys and Wipro confirm. The growth is slow and the margins are maintained through an unprecedented tight strap, including delays in salary walks.
For FY25, TCS, Infosys and Wipro have reported a constant currency income (CC) of 4.2, 4.2 and less 2.3 % respectively. This follows a very weak FY24 for which the colleagues reported a CC income growth of 3.4, 1.2 and less 4.4 percent respectively. The perspective is not very encouraging, with a growth of the income of the fiscal year 26 that is probably negative or in a single low digit. While part of the guilt of the perspective of FY26 Fy26 can be assigned to the uncertainty related to Trump’s tariffs, the growth of GDP of the United States was very robust in the last two years with the global technology partners that flourished. Medium capitalization’s Indian players are also growing much faster than their first -level companions when focusing on niche domains. Global capacity centers have emerged in large quantities, competing with conventional IT specialties for talent and businesses. Therefore, specialties seem to be facing a business of their agile competitors business, interruption of AI and global deceleration. This requires some introspection of companies. Not taking strategic steps could now mean that the technological specialties of India could end like an IBM and Intel, which once dominated their industry, but now they are also Rans. Unlike banks, public services or telecommunications services, where the companies themselves dominate for decades at the end, in innovation/technological change it is persistent, fast and ruthless. Once a technology company is left behind, it becomes almost impossible to catch up.
At risk they are not only the shareholders of the Indian IT who have endured a torrid time in the last three years, but also other interested parties. The players of the three great of IT have reduced their employee count by 50,000 between fiscal year 23-25 compared to an increase of 2.7 Lakh in fiscal year 21-23 and 1.2 Lakh in fiscal year 2019-21. Therefore, an important job creation engine for the Indian middle class is stuttering.
Given the implications for the economy in general, the need for management to communicate honestly to interested parties instead of covering the low performance with the fashion words of AI and Prosy comments. Companies must review their distribution payment policies from 75 to 90 percent of their profits to shareholders and invest in emerging ISED technologies. The low performance of the shares in the last three years is sufficient proof that high dividends and repurchases do not help shareholders when growth is under a cloud. The brave may not live forever, but the cautious do not live at all. It is time for great IT services to take risks, so that they do not become the global technological scene and the Indian corporate scene.
Posted on April 21, 2025