IT services companies are expected to see a consistent recovery from October to December due to increased demand in the banking, financial services, and insurance (BFSI) sector, as well as a decrease in project closures, shorter furlough periods, and a reduction in macroeconomic uncertainty. While sequential growth is expected to remain moderate, analysts say the outlook for individual companies and total contract value (TCV) is much better than it was the previous year.
Rising digital investments in financial services, continued adoption of cloud and data services, and the reduction of election-related uncertainty in developed nations are the primary drivers of recovery. "Furloughs in the December quarter are much reduced compared to last year, bolstering growth momentum," according to Kotak Institutional Equities.
HCLTech is expected to see a strong 4.4% increase in revenue, while mid-tier firms like Coforge and Persistent Systems are expected to lead the growth route with sequential revenue gains of 4.7%. Major sector participants like TCS and Infosys, however, are anticipated to report much slower growth, with rates below 1%. Despite confronting challenges in the hi-tech sector, LTIMindtree is expected to show consistent growth, bolstered by its diverse portfolio. Although analysts point to the BFSI sector's impressive growth as a plus, they caution that other sectors remain questionable.
According to industry analysts, "BFSI is moving at a strong pace, but we are less confident about growth in non-financial segments."
