IT services companies are expected to see 9-12% dollar revenue growth in FY22, driven by accelerating demand for digital technologies from businesses around the world and in part due to weak last year’s base due to the impact of COVID-19, ratings agency ICRA said.
Industry growth is expected to moderate slightly to 6-9% in FY23, also partly due to the base effect, ICRA said on Tuesday.
“In line with the growth trajectory seen over the past few quarters, Indian IT services companies are expected to record healthy growth in the short term due to the above-mentioned favorable factors,” said Deepak Jotwani, Assistant Vice President of ICRA and Business Leader.
He added that the growth was supported by an uptick in all key verticals such as BFSI, telecommunications, manufacturing, retail and distribution.
However, concerns have emanated from high levels of attrition due to the high demand for digital technologies and the lack of adequate skilled labor to maintain them. Companies are reskilling their employees to overcome this challenge.
Additionally, they have also been able to increase employee productivity through increased deployment of technology.
Hiring by IT companies is at an all-time high, buoyed by strong demand and net addition over the past four quarters has increased exponentially, Jotwani noted.
ICRA said IT services companies remain focused on improving the share of fixed-price contracts as it provides better revenue visibility.