The Indian IT services sector faced minimal disruptions due to the Covid-19 pandemic and the sector is expected to post a 7-9 percent growth in Rupee (INR) terms; and 5-8 percent growth in Dollar terms (US$) for FY2022, ICRA Research said.
Demand for digital technologies and resumption of normal economic activity will drive healthy growth in Indian IT. The industry’s operating margins at 23 percent are likely to remain robust and similar to pre-Covid levels.
Gaurav Jain of ICRA said: “Demand for IT services has been mildly impacted due to Covid-19 pandemic on all end-user industries though some sectors like travel/hospitality, retail, oil/gas has been impacted more severely. However, higher adoption of digital services has mitigated the impact to a large extent and 90-95 percent work from home (WFH) was achieved for majority of IT services players by April’20.”
The BFSI vertical was initially impacted as modifications were required in confidentiality agreements with clients while the BPO vertical was impacted due to infrastructure constraints. The pace of conversion of earlier deal wins into revenues have picked up pace after some moderation during Q1 FY2021.
The focus of new deals is now on cost take-outs, cloud transformation, virtualisation and digital customer experience, although this has increased conversion time due to Covid-19. The pricing pressure mostly seen in legacy work during contract renegotiations too has been compensated by new digital transformation deals.