Slowdown in hyper-scalers could impact the revenue of the IT companies'

Major IT companies in India including Tata Consultancy Services (TCS), Wipro, Infosys and HCL earn nearly 50 per cent of their revenue from digital solutions supported by hyper-scalers like AWS, Azure

The revenue of the IT service providers may be impacted by up to 33 per cent due to a fall in the growth rate of three platforms, Amazon Web Services, Microsoft Azure and Google Cloud. In the first half of 2022, the three platforms have reported a 7 per cent fall in incremental revenues, according to a report by Economic Times (ET).

The Chinese cloud service providers have already reported a slowdown in growth. Major IT companies in India including Tata Consultancy Services (TCS), Wipro, Infosys and HCL earn nearly 50 per cent of their revenue from digital solutions. Most of it is linked to the three platforms.  

ET quoted Peter Brandon-Samuel, chief executive of the Everest Group, as saying, "This slowdown is yet another indication that the modernization movement is running into headwinds, and these will absolutely affect the IT majors as a significant portion of their growth over the last two years has been driven by modernization and the move to cloud."

Modernisation is the movement of legacy services to the cloud. It has been a huge factor in driving the growth of these IT giants, the report stated. 

Among the top IT companies, TCS has the largest part of its revenue coming from the service platforms like AWS and Google Cloud. However, some experts believe that the slowdown is more precautionary than permanent. 

"The Covid-19 pandemic pushed a lot of cloud migrations practically overnight and that pace is slowing down as enterprises rationalize their investments in anticipation of the ‘new normal’ becoming business as usual over the next couple of years," Hansa Iyengar, senior principal analyst at Omdia told ET. 

The slowdown may be due to the regulations imposed on Chinese hyper-scalers. These hyper-scalers have made up 10 per cent of the market share while 60 per cent is occupied by Azure, AWS and Google Cloud.