10/14/23, 6:37 PM Big Tech’s Revenue Soars, Indian IT Plummets

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The tables have turned. While the revenue of big tech (MAANG) seems to
be improving, Indian IT (WITCH) succumbs to losses. This week, in the
first quarter earnings, the big tech’s combined revenue stood at 41
percent, whereas Indian IT saw a dip in its fourth quarterly result, and
experts believe that the resurgence of the IT service sector will most
likely happen in the next two quarters.

Big tech’s growth rates have surged once again, thanks to aggressive cost-
cutting measures that included layoffs and job cuts, alongside shutting
down less profitable initiatives. This impressive financial performance
has instilled confidence among investors on Wall Street. Now, investors
are bracing for the tech industry’s upcoming shift in financial focus – an
anticipated surge in spending to capitalise on Generative AI boom.

On the other hand, Indian IT has been a little laid back on cost-cutting
measures and has not laid off its employees. Majority of companies are

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10/14/23, 6:37 PM Big Tech’s Revenue Soars, Indian IT Plummets

continuing to invest in upskilling and research initiatives. Like big tech,

they too are betting big on Generative AI, developing PoCs and solutions
– and not just products – for its customers across sectors, and believe
that it would reap significant revenue in the coming quarters.

Here’s a quick glimpse of Indian IT’s poor Q4 performance:

In FY23 Q4, most companies, including TCS, Infosys,

HCL, Wipro and Tech Mahindra experienced lower-than-
expected growth in their revenue, despite reporting
higher revenue compared to the same quarter the
previous year. For instance, TCS earned INR 59,162 Cr (16.9%
YoY), Infosys earned INR 37,441 Cr (16% YoY), HCL earned INR
26,606 Cr (17.75% YoY), Wipro earned INR 23,190 Cr (11.20%
YoY), and Tech Mahindra earned INR 13,718 Cr (13% YoY).

Even the constant currency (CC) revenue for most

companies in FY23 Q4 was down despite the weakened
rupee value. For example, Infosys experienced a 3.2% decline
with $4,554 million, HCL witnessed a 1.2% drop with $3,234.6
million, and Wipro reported a 0.6% fall with $2,831 million. Tech
Mahindra’s CC revenue remained the same with $1,668 million.

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10/14/23, 6:37 PM Big Tech’s Revenue Soars, Indian IT Plummets

For most IT companies the margins declined primarily

due to the banking crisis, which affected the BFSI vertical.
For example, TCS’s margin decreased from 25% to 24.5%, Wipro’s
margins fell from 17% to 16.3%, and Tech Mahindra's margins
declined significantly from 13.2% to 11.2%. On the other hand,
Infosys and HCL’s margins increased from 20.5% to 21% and 18%
to 18.2%, respectively.

On the attrition front, most IT companies saw a

downward trend. TCS's attrition rate fell to 20.10% (from
21.30% in Q3FY23), Infosys's attrition rate decreased to 20.90%
(from 24.30% in Q3FY23), HCL's attrition rate dropped to 19.50%
(from 21.70% in Q3FY23), Wipro reported a 19.2% attrition rate
(LTM basis), and Tech Mahindra's attrition rate declined to 15%
(from 17% in Q3FY23).

Most IT companies also witnessed a decline in new deals

in their latest financial results due to macroeconomic
uncertainty, caused by slow decision-making and client
spending cuts. For example, Infosys experienced a decrease of
$2.1 billion (down 36% QoQ), HCL's new deals dropped by $2.07
billion (down 11% QoQ), Wipro witnessed a decline of $4.1 billion
(down 5% QoQ), and TechM's new deals decreased by $582 million
(down 27% QoQ). However, TCS reported a significant increase in
new deals by $10 billion (up 28% QoQ).

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10/14/23, 6:37 PM Big Tech’s Revenue Soars, Indian IT Plummets

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