Recovery in global IT markets bodes well for Indian tech companies: Report
After the release of strong quarterly results by IT global Accenture, analysts are optimistic that Indian IT companies may also post strong numbers in the coming quarters, following the global trend.
A report by HDFC Securities suggests that Accenture’s performance points to a potential recovery for the IT sector as a whole, providing positive insights for Indian firms.
“Accenture’s Q4FY24 results confirmed signs of improvement in the IT sector,” the report said.
The company’s Q4 FY24 results highlighted significant developments in the IT industry. According to the report, the company’s top guidance is focused on stable economic conditions, with 4 percent volatility in organic growth – from a negative 1 percent in FY24 to a projected positive 3 percent in FY25.
This shift suggests that the global IT landscape is starting to show signs of recovery, driven by demand for outsourcing and major deals.
The report noted that this trend is likely to benefit Indian IT companies, which are heavily focused on outsourcing and large deals. Accenture’s strong performance in outsourcing, especially for large contracts, is seen as a good indicator for Indian IT companies that also rely heavily on this segment for growth.
“Continued strong growth in outsourcing driven by large deals can be interpreted as a positive indicator for Indian IT” added the report.
Sustained outsourcing demand is expected to help Indian IT companies improve their performance in the coming quarters.
However, the report also noted that growth may not be entirely consistent with India’s IT sector. It pointed out that Accenture’s growth has largely been supported by public service contracts, which may not work for Indian IT companies that typically have a small share in the sector.
“The increase may not be entirely national due to the large share of public service contracts carried out by the company” notes the report.
Apart from this, positive trends in other verticals such as Communications, Media, and Technology (CMT), and a slight recovery in the Banking, Financial Services, and Insurance (BFSI) sector, are encouraging for Indian IT firms.
Overall, although the recovery in the global IT market bodes well for Indian companies, the rate of their growth will depend on how they can use these trends and face the challenges in certain sectors.
