Slowing spend by telcos drags IBM India earnings; FY19 net down 12%

IBM India continued to see subdued earnings growth for a second straight year as slowdown in the telecom segment affected its revenue and profit numbers in the financial year ended March 2019.

In FY19, IBM India's net profit declined by around 12 per cent on a year-on-year basis to Rs 2,426.40 crore, against Rs 2,755 crore in FY18, according to RoC filing accessed by business intelligence platform Tofler.

Its revenues from operations during the period dropped 2.85 per cent to Rs 26,542 crore, compared with Rs 27,323 crore last financial year.

Both profit and revenues came way below those in FY17, when IBM India's revenues had stood at Rs 32,324 crore and net profit at Rs 6,189 crore. Sources in the know said that advance pricing agreement (APA) with the Central Board of Direct Taxes (CBDT) was a major reason behind a spurt in the company's earnings in 2016-17.

Net margin of the company in FY19 stood at 8.89 per cent as compared to 9.88 per cent reported a year ago period.

IBM India, which used to be one of the fastest growing regions for the global IT firm, has seen some slackening owing to slowdown in telecom segment which used to be the sweet spot for the Armonk, New York-headquartered technology major.

The company works as a key IT vendor for country's largest bank, State Bank of India and Bank of Baroda among others. In government business side, IBM India is working in fraud management space with the GST authorities apart from supporting government initiatives like Doubling the Farmers' Income (DFI) programme.

IBM India has four primary business segments such as hardware, software, financing and sale of services which include software exports. India is home to IBM’s biggest employee base with an estimated 130,000 staffers out of its global employee count of around 380,000.