The Impressive TimesBengaluru, Oct 17, 2024: In a notable shift within the Indian IT landscape, Infosys has outperformed its rival Wipro for the July-September quarter, primarily due to strong demand from European clients, particularly in the banking sector. This performance signals a broader recovery in India’s IT services industry.
For the second quarter, Infosys reported a revenue of $4.894 billion, reflecting a sequential increase of 3.8% and a year-over-year growth of 3.7%. European clients contributed significantly to this growth, accounting for approximately 65% of the company’s incremental revenue, which amounted to $180 million, with $117 million coming from Europe alone. During a post-earnings briefing, Infosys CEO Salil Parekh highlighted the robust performance in the banking and financial services sectors as key drivers of the company’s success. “The growth can be attributed to strong traction in financial services, while we’ve also observed quarter-on-quarter growth across most sectors, with the exception of retail,” Parekh stated.
In terms of financial results, Infosys reported a profit of $778 million for the second quarter, which represents a 1.83% increase compared to the previous quarter and a 3.6% increase year-on-year. Analysts had anticipated slightly lower figures, with expectations set at $4.86 billion in revenue and a net profit of $814 million.
Looking forward, Infosys raised its annual growth guidance to a range of 3.75% to 4.5% in constant currency for the fiscal year ending March 2025. This marks the seventh revision of its growth expectations in eight quarters, reflecting the company’s confidence in a recovering demand environment.
In contrast, Wipro’s performance was more subdued. The company reported revenue of $2.66 billion for the second quarter, showing a modest sequential growth of 1.02%. Its profit stood at $385 million, which is a 5.77% increase from the previous quarter and a notable year-on-year growth of 19.9%. Despite this positive trajectory, Wipro’s outlook remains cautious, with projections indicating potential revenue contraction of 2% to no growth in the upcoming December quarter.
Srinivas Pallia, Wipro’s CEO, acknowledged the contribution from European clients, which accounted for 63% of the company’s incremental revenue. He noted that while there are signs of growth in various sectors, especially in banking and financial services, the company must continue to adapt and evolve to seize opportunities. Both companies are navigating a challenging macroeconomic landscape, characterized by tight tech budgets and high interest rates in the U.S. market, which have impacted the demand for software services. Nonetheless, both Infosys and Wipro report continued growth from banking and financial services, which represent a significant portion of their revenues.
In terms of workforce expansion, Infosys outpaced Wipro by adding 2,456 employees in the quarter, more than double Wipro’s 978 additions. This increase in headcount reflects optimism about the demand environment and signals a positive outlook for the Indian IT sector.
As the global economy gradually stabilizes and client spending increases, industry analysts remain hopeful about the prospects for recovery in the IT services market, suggesting that 2025 may usher in a more favorable landscape for Indian IT companies.
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