Revenues of Indian public tech firms grew 4.5% QoQ, 17.8% annually: Nasscom

Digital and cloud the key drivers, with the share

Revenues of Indian public technology companies grew 4.5 per cent sequentially and 17.8 per cent annually, with digital and cloud remaining the major drivers, industry body  National Association of Software and Services Companies (Nasscom) "Quarterly Industry Review" has found. It added that companies expect to grow in double digits going forward.

The report covers the second quarter of FY22, ended September 30, 2021.

Digital revenues at the firms rose 10.2 per cent sequentially, while the share of digital business in the revenue pie of select companies expanded to 56.6 per cent during the quarter.

Growth in revenues across all the major markets continued sequentially as well as year-on-year. Revenues from India bounced back this quarter, growing 8.1 per cent QoQ.

Among business verticals, all sectors continued to witness growth both sequentially and annually. Manufacturing led in terms of sequential growth, while BFSI maintained lead on annual growth, while Travel and Hospitality showed a strong rebound.

Net margins continued to decline sequentially primarily driven by salary hikes, new hires, increased sub-contracting costs as well as travel and facility costs. This quarter, y-o-y margins also declined as talent availability continues to put pressure on hiring, retaining and sub-contracting costs.

Net client addition maintained a positive trend with most companies witnessing new additions during the quarter. Revenue per client continued to increase on a sequential basis supported by high growth in revenues.

   

However, talent availability driven by increased attrition remains a key challenge that companies continue to address on priority

Employee count increased 5.3 per cent sequentially, and was up 17.5 per cent year-on-year as hiring remained the key strategy to counter talent availability. Also, as the demand environment remains healthy, companies’ plans to hire more in the next few months of 2021.

Utilization levels across companies continue to trend at record high levels.

Attrition continued to rise, reaching 19.3 per4 cent this quarter, up from 17.5 per cent last quarter. This increase continues to be driven by the rising demand for new-age digital skills across industries. Companies continue to counter this trend through increased fresher hiring and focusing on reskilling and upskilling their current workforce.

Overall, companies are maintaining expectations of a double-digit growth guidance for FY22. The optimism continues to increase this quarter as well with most companies that report guidance revising it upwards from last quarter.