Q4 Challenges Continue in IT Sector; Focus Shifts to FY25 Outlook

HCL Tech and Tata Consultancy Services (TCS) are planning to outperform their software rivals at $250 billion Indian outsourcing industry is preparing its fourth-quarter earnings from next week. Investors will closely look into the business outlook for FY25, especially regarding the high discretionary expenses by the US and European countries.

This period is crucial for companies as global economic conditions are impacting the supply chain and distribution of companies resulting in the preference change of consumers. Investors and analysts will surely be affected by the sector’s performance in Q4 and its outlook for FY25.

Along with the investors and analysts, job seekers are also seeking a high tense as the worldwide economic market of the text industry has been narrowed down. This results in layoffs leading to less software growth. Indian companies like HCL Tech, TCS, and Infosys found this as a big gap in the market and decided to launch their exclusive software bringing a revolutionary change in the market.

Crucial period for global tech companies:

Major Tech Global companies like Accenture, Cognizant, and Capgemini have faced slow or even lower growth in FY24 ending in August. This was due to the continuous pressure of the clients due to their IT budgets. This narrowed down the new software tech introduced by the company. Accenture even pointed out exiting from the high contribution in the large win deals.

BNP Paribas, a multinational universal bank with headquarters in Paris, France stated that the tech industry is challenged with the discretionary demand of persisting in the next 3 to 4 months. The increasing Purchasing Managers’ Index (PMI) benign inflation prints are a start to the rate easing cycle that should be allowed for the continuation of the Goldilocks Phase.

Growth of the Indian Tech companies:

For Indian tech companies like TCS, Infosys, HCL Tech, and Wipro it is anticipated that the fourth quarter of FY24 have organic revenue growth ranging from -1% to +1%.

The middle and small companies have a possibility of generating 1 to 3% of USD organic growth in every quadrant-on-quadrant (QoQ).

The third quadrant and partly fourth quadrant of FY24 could be seasonally weak. It is predicted that from the end of December, the IT earnings of the Indian tech industry will turn into profitable numbers. Infosys has trimmed its revenue generation for FY24 while Wipro has already made some modern estimates.

The IT budgets are expected to bolster the primary revenue-generating market in Indian technology with an anticipated start of the US rate-easing cycle. With a strong winning deal in the recent quarters, it is projected to accelerate the robust revenue growth in FY25.

To Summarize

In conclusion, HCL Tech and Tata Consultancy Services (TCS) have dominated the IT industry by outsourcing their best software with a growth acceleration in FY25. This is leading to the win of strong deals in the US market hoping for robust growth in the tech industry while the whole IT industry is facing an economic crisis.