Bottomline growth of IT firms at 4-year high

The information technology (IT) industry is booming again. The net profit growth of 26 IT companies surged to a four-year high of 42 per cent for the year ended March 2005. Income from IT services rose over 37 per cent.

Software giants Infosys Technologies and Wipro outperformed the sector averages. Infosys' revenue from IT services rose 46.9 per cent while its net profit increased by 48.48 per cent. Wipro's net profit grew at 57.9 per cent, while sales rose 38.9 per cent.

Tata Consultancy Services (TCS) could not be considered for this study as data on its financial performance for the year ended March 2004 are not available.

The sales and revenue growth of the IT sector had dipped to a new low in fiscal 2002 when it posted a modest 10 per cent rise in revenues. Net profit growth was at 3.88 per cent, with the bottomline of Wipro actually declining by over three per cent.

The strong growth in the IT sector in the last couple of years was driven by 10 companies.

The revenues of these firms have more than doubled in two years. Seven companies more than doubled their bottomline.

The revenues and net profit of Geometric Software, KPIT Cummins, Hexaware Technologies and Flextronics Software (formerly Hughes Software) more than doubled in two years. Wipro doubled its revenue in two years while its net profit rose by almost 100 per cent.

Infosys, a Rs 500-crore software firm in 1999, became the first IT services company along with TCS and Wipro to become billion dollar firms in 2004.

With the sales revenue of over Rs 7,000 crore in the fiscal 2005, Infosys is likely to be a $2 billion company next year. The net profit of Infosys jumped up from Rs 133 crore in 1999 to Rs 1,244 crore in 2004 and to Rs 1,847 crore in 2005.