Quarterly IT services update

by 5paisa Research Team Last Updated: Dec 13, 2022 - 11:37 pm 48.7k Views

Indian IT services continued to perform strongly in Q3CY21 as the strong momentum continued in winning deals in managed and as-a-services deals.

It is estimated more than 2000 medium to small deals were won through CY22, a record high so far. Despite strong ACVs, pipeline remains strong. Managed services deals worth $8.4bn were signed, showcasing a strong growth of +21.7% YoY, and+2.4% QoQ even after a strong Q2 performance. Among these, ITO grew at +12% YTD21 and BPO grew at +40% YoY. As-a-Service generated deals worth $13.4bn and grew at +55.8% YoY, and +14.5% QoQ. Going forward, Managed services are estimated to grow at +10.1% YoY (revised from +9% YoY) and As-a-Service to grow at +25% YoY (revised from +21% YoY).

Between 2019 and 2021, the companies have been effective in passing on the cost to the clients in new contracts. A 4% growth in the new contract prices have already been witnessed and accepted. However, the pressure remains on the existing contracts.

Even with the increase in prices, the demand still high, especially in ADM, ER&D Services and Industry specific BPO. ER&D services are gaining high demand in Manufacturing, Hitech and Healthcare industries. Going forward, the tech companies may face issues as the spendings are estimated to increase in CY22 itself. Discretionary spending is improving and there is shift of spending from hardware to new-age tech services like Cloud, cybersecurity, analytics, data.

The maximum demand came from Retail & CPG (+38% YoY), followed by Travel (31% YoY), Business services (+30% YoY), Telecom (+28% YoY), Manufacturing (+27% YoY), Energy (+26% YoY), and BFSI (+20% YoY). While, there was a muted growth from the healthcare with only +13% YoY.

Geographically, Americas posted the maximum growth at 36.5% YoY and +19.6% QoQ while APAC reported a mute growth of 59.6% YoY, and -6.4% QoQ. EMEA contributed and grew at +35.4% YoY, and +3.2% QoQ

The future outlook and prospects look very positive and robust for the Indian IT industry.

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