Indian IT Companies Rock
And other top Tech Stories of the Week
A recent study by Nasscom shows that the Indian IT companies made a massive contribution to the US economy last year through employment, investment, strategic partnerships, and business deals. The Indian IT companies, alongside its customers, have generated $396 billion in US sales, supporting a total of 1.6 million jobs and contributing over $198 billion to the US economy. It also spent about $1.1 billion to grow STEM learning in the US and developed partnerships with nearly 180 institutions in the US.
Nearly 40-78 per cent of the revenues of Indian IT companies come from the US. Of which, TCS, Infosys, Wipro, HCL Technologies and Tech Mahindra have more than 50 per cent exposure. Indian IT accounts for about 55 per cent of the global IT services industry market share.
The Indian IT companies significantly contribute to India’s GDP – 8 per cent in the fiscal year 2021. As per a Gartner report, the Indian IT spending in India was forecasted to be $81.89 billion last year and further increase to $101.8 billion in 2022, an increase of 24.31 per cent year-on-year. Also, the Indian IT industry’s revenue had grown by 2.3 per cent to $194 billion in FY21.
This is bound to change in the coming months, with the threat of recession lurking around the corner. As per Bloomberg India, India has a zero per cent chance of going into recession compared to other countries like the US, China, Japan, etc. However, some impact can be seen on Indian IT companies as the majority of their business is in the US, and there is a 40 per cent chance of the US in recession, leading to job cuts, loss in the market, and deal hold-ups, supply chain disruptions, etc.
During the recent earnings calls, most IT heads were optimistic about the recession and believed that the customers would spend in the tech space while they kept a close watch on plausible roadblocks.
While there is a high chance of recession and inflation in the US hitting the Indian IT sector, there seems to be a glimmer of hope, given the history of companies coming out strong, particularly during the 2008 financial crisis and the recession, where India was able to sustain and face those eventualities and come out successful on the economic front.
Market talks: Every time a US recession comes, it brings down the oil prices, hugely benefiting the Indian economy. But, if the impact is huge, it will put pressure on the IT sector in the short term.
The attrition rate in the IT space continues to rise at an all-time high across companies. Based on the latest financial findings, Cognizant seems to have the highest attrition rate at 31 per cent (FY22 Q2), while Tech Mahindra witnessed a decline in attrition rate from 24 per cent to 22 per cent in FY23 Q1.
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